<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 26, 1995
REGISTRATION NO. 33-55475
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------
A. EXACT NAME OF TRUST:
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 1*
B. NAME OF DEPOSITOR:
PRUDENTIAL SECURITIES INCORPORATED
------------------------
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICE:
ONE SEAPORT PLAZA
199 WATER STREET
NEW YORK, NEW YORK 10292
------------------------
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
<TABLE>
<S> <C>
LEE B. SPENCER, JR., ESQ. Copy to:
PRUDENTIAL SECURITIES INCORPORATED KENNETH W. ORCE, ESQ.
ONE SEAPORT PLAZA CAHILL GORDON & REINDEL
199 WATER STREET 80 PINE STREET
NEW YORK, NEW YORK 10292 NEW YORK, NEW YORK 10005
</TABLE>
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
AN INDEFINITE NUMBER OF UNITS OF
NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES 1
PURSUANT TO RULE 24f-2 PROMULGATED UNDER
THE INVESTMENT COMPANY ACT OF 1940 AS AMENDED.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
INDEFINITE
G. AMOUNT OF FILING FEE:
$500 (AS REQUIRED BY RULE 24f-2)**
------------------------
H. APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE
OF THE REGISTRATION STATEMENT.
/ / Check box if it is proposed that this filing will become effective on
, 1995 immediately upon filing pursuant to Rule 487.
* Formerly National Equity Trust Select Five Portfolio Series 1
** Previously paid.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
NATIONAL EQUITY TRUST LOW PORTFOLIO SERIES 1
CROSS-REFERENCE SHEET
PURSUANT TO RULE 404 OF REGULATION C
UNDER THE SECURITIES ACT OF 1933
(FORM N-8B-2 ITEMS REQUIRED BY INSTRUCTION AS
TO THE PROSPECTUS IN FORM S-6)
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
------------------------------------------------------ ------------------------------------------------------
I. ORGANIZATION AND GENERAL INFORMATION
<S> <C>
1. (a) Name of Trust..................................... Prospectus front cover
(b) Title of securities issued........................ Prospectus front cover
2. Name and address of each depositor.................... Sponsor, Prospectus back cover
3. Name and address of trustee........................... Trustee
4. Name and address of each principal underwriter........ Sponsor
5. State of organization of trust........................ The Trust
6. Execution and termination of trust agreement.......... Summary of Essential Information; The Trust; Amendment
and Termination of the Indenture-- Termination
7. Changes of Name....................................... *
8. Fiscal year........................................... *
9. Litigation............................................ *
<CAPTION>
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
<S> <C>
10. (a) Registered or bearer securities................... *
(b) Cumulative or distributive securities............. *
(c) Redemption........................................ Rights of Unit Holders--Redemption
(d) Conversion, transfer, etc......................... Rights of Unit Holders--Redemption
(e) Periodic payment plan............................. *
(f) Voting rights..................................... *
(g) Notice to certificateholders...................... The Trust; Rights of Unit Holders--Reports and
Records; Sponsor--Responsibility; Sponsor--
Resignation; Trustee--Resignation; Amendment and
Termination of the Indenture
(h) Consents required................................. The Trust; Amendment and Termination of the Indenture
(i) Other provisions.................................. Tax Status
11. Type of securities comprising units................... Prospectus front cover; The Trust
</TABLE>
- ------------------
* Inapplicable, answer negative or not required.
i
<PAGE>
<TABLE>
<S> <C>
12. Certain information regarding periodic payment
certificates........................................ *
13. (a) Load, fees, expenses, etc......................... Summary of Essential Information; Public Offering of
Units--Public Offering Price; Public Offering of
Units--Profit of Sponsor; Public Offering of
Units--Volume Discount; Public Offering of
Units--Employee Discount; Exchange Option;
Reinvestment Program; Expenses and Charges
(b) Certain information regarding periodic payment
certificates...................................... *
(c) Certain percentages............................... Summary of Essential Information; Public Offering of
Units--Public Offering Price; Public Offering of
Units--Profit of Sponsor; Public Offering of
Units--Volume Discount; Public Offering of
Units--Employee Discount; Exchange Option
(d) Price differentials............................... Public Offering of Units--Employee Discount
(e) Certain other fees, etc. payable by holders....... Rights of Unit Holders--Certificates
(f) Certain other profits receivable by depositor,
principal underwriter, trustee or affiliated
persons........................................... Rights of Unit Holders--Redemption--Purchase by the
Sponsor of Units Tendered for Redemption
(g) Ratio of annual charges to income................. *
14. Issuance of trust's securities........................ The Trust; Rights of Unit Holders--Certificates
15. Receipt and handling of payments from
purchasers.......................................... *
16. Acquisition and disposition of underlying
securities.......................................... The Trust--Trust Formation; The Trusts-- Securities
Selection; Rights of Unit Holders-- Redemption;
Sponsor--Responsibility
17. Withdrawal or redemption.............................. Rights of Unit Holders--Redemption
18. (a) Receipt, custody and disposition of income........ Rights of Unit Holders--Distributions; Rights of Unit
Holders--Reports and Records
(b) Reinvestment of distributions..................... Reinvestment Program
(c) Reserves or special funds......................... Expenses and Charges; Rights of Unit Holders--
Distributions
(d) Schedule of distributions......................... *
19. Records, accounts and reports......................... Rights of Unit Holders--Distributions; Rights of Unit
Holders--Reports and Records
20. Certain miscellaneous provisions of
trust agreement..................................... Sponsor--Limitations on Liability;
(a) Amendment......................................... Sponsor--Resignation;
(b) Termination....................................... Trustee--Limitations on Liability;
</TABLE>
- ------------------
* Inapplicable, answer negative or not required.
ii
<PAGE>
<TABLE>
<S> <C>
(c) and (d) Trustee, removal and successor............ Trustee--Resignation;
(e) and (f) Depositor, removal and successor.......... Amendment and Termination of the Indenture
21. Loans to security holders............................. *
22. Limitation on liability............................... The Trust; Sponsor--Limitations on Liability;
Trustee--Limitations on Liability; Evaluator--
Limitations on Liability
23. Bonding arrangements.................................. Additional Information--Item A
24. Other material provisions of trust agreement.......... *
<CAPTION>
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
<S> <C>
25. Organization of depositor............................. Sponsor
26. Fees received by depositor............................ *
27. Business of depositor................................. Sponsor
28. Certain information as to officials and affiliated
persons of depositor................................ Contents of Registration Statement--Part II
29. Companies controlling depositor....................... Sponsor
30. Persons controlling depositor......................... *
31. Payments by depositor for certain services rendered to
trust............................................... *
32. Payments by depositor for certain other services
rendered to trust................................... *
33. Remuneration of employees of depositor for certain
services rendered to trust.......................... *
34. Remuneration of other persons for certain services
rendered to trust................................... *
35. Distribution of trust's securities in states.......... Public Offering of Units--Public Distribution
36. Suspension of sales of trust's securities............. *
37. Revocation of authority to distribute................. *
38. (a) Method of distribution............................ Public Offering of Units
(b) Underwriting agreements........................... Public Offering of Units
(c) Selling agreements................................ Public Offering of Units
39. (a) Organization of principal underwriter............. Sponsor
(b) N.A.S.D. membership of principal underwriter...... Sponsor
40. Certain fees received by principal underwriter........ *
41. (a) Business of principal underwriter................. Sponsor
(b) Branch offices of principal underwriter........... Sponsor
(c) Salesmen of principal underwriter................. *
</TABLE>
- ------------------
* Inapplicable, answer negative or not required.
iii
<PAGE>
<TABLE>
<S> <C>
42. Ownership of trust's securities by certain persons.... *
43. Certain brokerage commissions received by principal
underwriter......................................... *
44. (a) Method of valuation............................... Summary of Essential Information; Public Offering of
Units--Public Offering Price; Public Offering of
Units--Public Distribution; Public Offering of
Units--Secondary Markets
(b) Schedule as to offering price..................... *
(c) Variation in offering price to certain persons.... Public Offering of Units--Public Distribution; Public
Offering of Units--Volume Discount; Public Offering
of Units--Employee Discount; Exchange Option
45. Suspension of redemption rights....................... *
46. (a) Redemption Valuation.............................. Summary of Essential Information; Rights of Unit
Holders--Redemption--Computation of Redemption Price
per Unit
(b) Schedule as to redemption price................... *
47. Maintenance of position in underlying securities...... Public Offering of Unit--Secondary Market; Rights of
Unit Holders--Redemption-- Computation of Redemption
Price per Unit; Rights of Unit
Holders--Redemption--Purchase by the Sponsor of
Units Tendered for Redemption
<CAPTION>
IV. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
<S> <C>
48. Organization and regulation of trustee................ Trustee
49. Fees and expenses of trustee.......................... Expenses and Charges
50. Trustee's lien........................................ Expenses and Charges--Other Charges
<CAPTION>
V. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
<S> <C>
51. Insurance of holders of trust's securities............ *
<CAPTION>
VI. POLICY OF REGISTRANT
<S> <C>
52. (a) Provisions of trust agreement with respect to
selection or elimination of underlying
securities........................................ Prospectus front cover; The Trust--Trust Formation;
The Trust--Objectives and Securities Selection;
Sponsor--Responsibility
(b) Transactions involving elimination of underlying
securities........................................ *
(c) Policy regarding substitution or elimination of
underlying securities............................. Sponsor--Responsibility
(d) Fundamental policy not otherwise covered.......... *
</TABLE>
- ------------------
* Inapplicable, answer negative or not required.
iv
<PAGE>
<TABLE>
<S> <C>
53. Tax status of trust................................... Prospectus front cover; Tax Status
<CAPTION>
VII. FINANCIAL AND STATISTICAL INFORMATION
<S> <C>
54. Trust's securities during last ten years.............. *
55.
56. Certain information regarding periodic payment
certificates........................................ *
57.
58.
59. Financial statements
(Instruction 1(c) to Form S-6)...................... Statement of Financial Condition
</TABLE>
- ------------------
* Inapplicable, answer negative or not required.
v
<PAGE>
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 1
LOGO
- --------------------------------------------------------------------------------
The objective of the Trust is total return through an investment for
approximately one year in a portfolio consisting of the five lowest dollar price
per share common stocks of the ten common stocks in the Dow Jones Industrial
Average having the highest dividend yields on April 24, 1995. Dow Jones and
Company Inc. has not participated in any way in the creation of the Trust or in
the selection of stocks included in the Trust and has not approved any
information included herein relating thereto. The value of the Units of the
Trust will fluctuate with the value of the portfolio of underlying Securities.
Units of the Trust may be suited for purchase by Individual Retirement Accounts,
Keogh Plans and other tax-deferred retirement plans.
Unit Holders may elect, prior to the Termination Date (approximately one year
after the creation of the Trust), one or more of the following options: (1)
receiving their pro rata share of the underlying Securities in kind, (2)
receiving cash upon the liquidation of their pro rata share of the underlying
Securities and (3) investing the amount of cash they would have received upon
the liquidation of their pro rata share of the underlying Securities in units of
a new trust (if one is offered).
The minimum purchase is $1,000 except that the minimum purchase in connection
with an Individual Retirement Account (IRA) or other tax-deferred retirement
plan is $250.
- --------------------------------------------------------------------------------
SPONSOR:
PRUDENTIAL SECURITIES [LOGO]
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PLEASE READ AND RETAIN Prospectus dated April 26, 1995
THIS PROSPECTUS FOR FUTURE REFERENCE.
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- --------------------------------------------------------------------------------
This Prospectus does not contain all the information with respect to the
investment company set forth in its registration statement and exhibits relating
thereto which have been filed with the Securities and Exchange Commission,
Washington, D.C. under the Securities Act of 1933 and the Investment Company Act
of 1940, and to which reference is hereby made.
- --------------------------------------------------------------------------------
The NATIONAL EQUITY TRUST, Low Five Portfolio Series 1 (the 'Trust') is
composed of common stock issued by the five companies whose common stocks are
the five lowest dollar price per share common stocks of the ten common stocks in
the Dow Jones Industrial Average having the highest dividend yield on April 24,
1995 (the 'Securities' or 'Security' or 'Low Five', as the context requires),
and contracts and funds for the purchase thereof and/or cash (or a letter of
credit in lieu of cash) with instructions to the Trustee to purchase Securities.
Subsequent to the Date of Deposit, the Sponsor may, but is not obligated to,
deposit additional Securities, contracts to purchase additional Securities
together with a letter of credit and/or cash (or a letter of credit in lieu of
cash) with instructions to purchase additional Securities maintaining to the
extent practicable the proportionate relationship of the number of shares of
each Security in the portfolio of the Trust (the 'Portfolio') immediately prior
to such deposit thereby creating additional Units which Units the Sponsor
intends to offer by means of this Prospectus. (See Part B--'The Trust.')
THE OBJECTIVE of the Trust is total return through an investment for
approximately one year in a portfolio of the five lowest dollar price per share
common stocks of the ten common stocks in the Dow Jones Industrial Average
having the highest dividend yield on April 24, 1995. (See 'Summary of Essential
Information' for the Termination Date of the Trust.) There can be no assurance
that such objective can be realized. The factors affecting the value of the
Securities are those factors that have an impact upon the value of equity
securities in general and particularly those factors that affect the economic
and financial condition of each issuer of a Security in particular. (Total
return includes (i) the value per Unit of the Securities in the Portfolio of the
Trust at the termination of the Trust less the value per Unit of the Securities
in the Portfolio of the Trust at the commencement of the Trust plus (ii) the
dividends paid on the Securities during the life of the Trust).
DISTRIBUTIONS of dividends received (net of expenses) and return of
capital, if any, by the Trust will be made quarterly on or shortly after the
Quarterly Distribution Date to Unit Holders of record on the Record Date
immediately preceding such Quarterly Distribution Date. (See Part B--'Rights of
Unit Holders--Distributions.') Because the expenses of the Trust may exceed the
dividend income received by the Trust there can be no assurance that there will
be any amounts available for distribution to Unit Holders.
PUBLIC OFFERING PRICE of the Units of the Trust during the initial offering
period is equal to the value of the underlying Securities in the Trust's
Portfolio divided by the number of Units outstanding in the Trust, plus the
applicable sales charge. A proportionate share of amounts, if any, in the Income
Account is also added to the Public Offering Price. (See Part B--'Public
Offering of Units--Public Offering Price.') The total sales charge consists of
an Initial Sales Charge and a Deferred Sales Charge, the maximum total of which
equals 2.75% of the Public Offering Price or 2.778% of the net asset value of
the Trust. The Initial Sales Charge is computed by deducting the Deferred Sales
Charge ($17.50 per 1,000 Units) from the aggregate sales charge; thus, on the
date of the Summary of Essential Information, the maximum Initial Sales Charge
is $10 per 1,000 Units or 1% of the Public Offering Price. The Initial Sales
Charge is deducted from the purchase price at the time of purchase. The Initial
Sales Charge will be reduced on a graduated basis on purchases of $50,000 or
more. The Deferred Sales Charge is paid through reduction of the net asset value
of the Fund by $1.75 per 1,000 Units monthly on each Deferred Sales Charge
Deduction Date commencing on the first Deferred Sales Charge Deduction Date
shown on page A-7. Units purchased pursuant to the Reinvestment Program are
subject only to remaining deductions of the Deferred Sales Charge (see
'Reinvestment Program'). If a Unit Holder exchanges, redeems or sells his Units
to the Sponsor prior to the last Deferred Sales Charge Deduction Date, the Unit
Holder is obligated to pay any remaining Deferred Sales Charge.
SECONDARY MARKET--The Sponsor, although not obligated to do so, presently
intends to maintain a secondary market for the Units in the Trust as more fully
described under Part B--'Public Offering of Units--Secondary Market.' If such a
market is not maintained, a Unit Holder will be able to dispose of his Units
only by tendering his Units to the Trustee for redemption. (See Part B--'Rights
of Unit Holders--Redemption--Computation of Redemption Price per Unit.') The
Sponsor's Repurchase Price, like the Redemption Price, will reflect the
deduction from the value of the underlying Securities of any unpaid amount of
the Deferred Sales Charge. Investors should note that the Deferred Sales Charge
of $1.75 per 1,000 Units will be deducted from the net asset value on the first
of each month commencing on the first Deferred Sales Charge Deduction Date shown
on page A-7, and to the extent the entire Deferred Sales Charge has not been so
deducted or paid at the time of redemption of the Units, the remainder will be
deducted from the proceeds of redemption or in calculating an in-kind
redemption.
TRUST TERMINATION--The Trust will terminate on the Termination Date set
forth in the Summary of Essential Information, approximately one year after the
Date of Deposit (unless terminated earlier; see part B--'Amendment and
Termination of the Indenture--Termination'). A Unit Holder's Units will be
redeemed in kind on the Termination Date by distribution of the Unit Holder's
pro rata share of the Securities and any cash in the Portfolio of the Trust on
such date to the Distribution Agent who will act as agent for such Unit Holder.
A-1
<PAGE>
SECURITIES DISPOSITION OPTIONS--A Unit Holder who so elects by notifying
the Trustee prior to the Termination Date of the Trust will have the Securities
received on the Termination Date disposed of on behalf of such Unit Holder by
the United States Trust Company of New York, as 'Distribution Agent' in
accordance with one or more of the following three options as elected by such
Unit Holder:
1. to have such underlying Securities distributed in kind no later
than the business day next following the Termination Date. Unit Holders
subsequently selling such distributed Securities will incur brokerage costs
when disposing of such Securities;
2. to receive the Unit Holder's pro rata share of the cash received
by the Distribution Agent (less expenses) upon the sale by the Distribution
Agent of the underlying Securities attributable to Unit Holders electing
this option over a period not to exceed 10 business days immediately
following the Termination Date. Amounts received by the Distribution Agent
over such 10 business day period representing the proceeds of the
underlying Securities sold will be held by the United States Trust Company
in accounts which are non-interest bearing to Unit Holders and which are
available for use by the United States Trust Company pursuant to normal
banking procedures and will be distributed to Unit Holders within 5
business days after the settlement of the trade for the last Security to be
sold; and/or
3. to invest the proceeds from the sale of the underlying Securities
attributable to Unit Holders electing this option within 30 days of the
Termination Date, as received by the Distribution Agent upon the sale of
such underlying Securities over a period not to exceed 10 business days
immediately following the Termination Date, in units of a subsequent series
of National Equity Trust as designated by the Sponsor (the 'New Series') if
such New Series is offered at such time. The Units of a New Series will be
purchased by the Unit Holder upon the settlement of the trade for the last
Security to be sold. Such purchaser will be entitled to a reduced sales
load upon the purchase of units of the New Series. It is expected that the
terms of the New Series will be substantially the same as the terms of the
Trust described in this Prospectus, and that similar options in a
subsequent series of the Trust will occur in each New Series of the Trust
approximately one year after that New Series' creation. The availability of
this option does not constitute a solicitation of an offer to purchase
Units of a New Series or any other security. A Unit Holder's election to
participate in this option will be treated as an indication of interest
only. At any time prior to the purchase by the Unit Holder of units of a
New Series, such Unit Holder may change his investment strategy and
receive, in cash, the proceeds of the sale of the Securities.
Unit Holders who do not elect as set forth above will have their Units
redeemed on the Termination Date and be deemed to have elected to receive the
cash proceeds from the sale of such Unit Holder's pro rata share of the
underlying Securities (option 2).
Under each option a Unit Holder will receive the Redemption Price per Unit
(net asset value) determined as of the Evaluation Time on the Termination Date.
The Distribution Agent will sell the underlying Securities in the case of the
second and third option over a period not to exceed 10 business days immediately
following the Termination Date. The proceeds of any such sales will be reduced
by any applicable brokerage commissions. The sale arrangement is one in which
United States Trust Company will be selling the Securities as agent for the Unit
Holder and is separate from the Trust which terminates on the Termination Date.
The proceeds of such sales may be more or less than the value of the Securities
on the Termination Date. The Sponsor, on behalf of the Distribution Agent if the
Sponsor effects such sales, or the Distribution Agent if the Sponsor does not,
will, unless prevented by unusual and unforeseen circumstances, such as, among
other reasons, a suspension in trading of a Security, the close of a stock
exchange, outbreak of hostilities and collapse of the economy, sell on each
business day during the 10 business day period at least a number of shares of
each Security which then remains in the Portfolio equal to the number of such
shares in the Portfolio at the beginning of such day multiplied by a fraction
the numerator of which is one and the denominator of which is the number of days
remaining in the 10 business day sales period. The proceeds of sale will not be
distributed by the Distribution Agent until the settlement of the trade upon the
sale of the last Security during the 10 business day period.
Depending on the amount of proceeds to be invested in Units of the New
Series and the number of other orders for Units in the New Series, the Sponsor
may purchase a large amount of securities for the New Series in a short period
of time. The Sponsor's buying of securities may tend to raise the market prices
of these Securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the 10
business day period following the Termination Date; depending on the number of
sales required, the prices of, and demand for Securities, such sales may tend to
depress the market prices and thus reduce the proceeds to be credited to Unit
Holders. The Sponsor believes that the sale of underlying Securities over a 10
business day period as described above is in the best interest of Unit Holders
and may mitigate the negative market price consequences stemming from the
trading of large amounts of Securities. The Sponsor, in implementing such sales
of Securities on behalf of the Distribution Agent, will seek to maximize the
sales proceeds and will act in the best interest of the Unit Holder. The
proceeds of the sale of the Securities will be in an amount equal to amounts
realized upon the sale of the Securities over the 10 business day period. There
can be no assurance, however, that any adverse price consequences of heavy
trading will be mitigated.
RISK FACTORS--Since the Trust Portfolio consists of common stock, an
investment in Units of the Trust should be made with an understanding of the
risks inherent in any investment in common stocks. The risks of investing in
common stock include
A-2
<PAGE>
risks associated with the rights to receive payments from the issuer which are
generally inferior to creditors of, or holders of debt obligations or preferred
stocks issued by, the issuer. Holders of common stock have a right to receive
dividends only when and if, and in the amounts, declared by the issuer's board
of directors and to participate in amounts available for distribution by the
issuer only after all other claims on the issuer have been paid or provided for.
By contrast, holders of preferred stocks have the right to receive dividends at
a fixed rate when and as declared by the issuer's board of directors, normally
on a cumulative basis. Dividends on cumulative preferred stock must be paid
before any dividends are paid on common stock and any cumulative preferred stock
dividend which has been omitted is added to future dividends payable to the
holders of such cumulative preferred stock. Preferred stocks are also entitled
to rights on liquidation which are senior to those of common stocks. For these
reasons, preferred stocks generally entail less risk than common stocks.
Moreover, common stock does not represent an obligation of the issuer and
therefore does not offer any assurance of income or provide the degree of
protection of capital of debt securities. The issuance of debt securities or
even preferred stock by an issuer will create prior claims for payment of
principal, interest and dividends which could adversely affect that ability and
inclination of the issuer to declare or pay dividends on its common stock or the
rights of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy. Further, unlike debt securities which typically have
a stated principal amount payable at maturity (which value will be subject to
market fluctuations prior thereto), common stock has neither a fixed principal
amount nor a maturity and have values which are subject to market fluctuations
for as long as the common stock remains outstanding. The value of the common
stock in the Trust thus may be expected to fluctuate over the life of the Trust
to values higher or lower than those prevailing on the Date of Deposit.
The value of the Units will fluctuate depending on all the factors that
have an impact on the economy and the equity markets. These factors similarly
impact on the ability of an issuer to pay dividends. The Trust is not a
'managed' registered investment company and Securities will not be sold by the
Trustee as a result of ordinary market fluctuations.
SPECIAL CHARACTERISTICS OF THE TRUST
Securities Selection. The Trust Portfolio consists of the five lowest
dollar price per share common stocks of the ten common stocks in the Dow Jones
Industrial Average ('DJIA') having the highest dividend yield as of April 24,
1995. Dow Jones and Company Inc. ('Dow Jones') has not participated in any way
in the creation of the Trust or in the selection of the stocks included in the
Trust and has not approved any of the information herein relating thereto. The
yield for each stock was calculated by the Sponsor by annualizing the last
quarterly ordinary dividend declared and dividing the annualized dividend by the
market value of the stock. Such formula (an objective determination) served as
the basis for the Sponsor's selection of the ten stocks in the Dow Jones
Industrial Average having the highest dividend yield (the 'Ten Highest-Yielding
Stocks'). The five lowest dollar price per share stocks from among the Ten
Highest-Yielding Stocks were then selected (the 'Low Five'). The Securities were
selected irrespective of any buy or sell recommendation by the Sponsor.
Investors should note that the above criteria were applied to the
Securities selected for inclusion in the Trust Portfolio as of April 24, 1995.
Subsequent to such date, the Securities may no longer rank among the five lowest
dollar price per share common stocks of the ten common stocks in the DJIA having
the highest dividend yield, the yields on the Securities in the Portfolio may
change or the Securities may no longer be included in the DJIA. However, the
Sponsor may, on and subsequent to the Date of Deposit, deposit additional
Securities and/or contracts to purchase additional Securities together with a
letter of credit which reflect the Portfolio as of the Date of Deposit, subject
to permitted adjustments, and/or cash (or a letter of credit in lieu of cash)
with instructions to purchase additional Securities and sell such additional
Units created. The original proportionate relationship between the number of
shares of each Security in the Trust will be adjusted to reflect the occurrence
of a stock dividend, a stock split, merger, reorganization or a similar event
which affects the capital structure of the issuer of a Security in the Trust but
which does not affect the Trust's percentage ownership of the common stock
equity of such issuer at the time of such event and adjust the proportionate
relationship accordingly to all future subsequent deposits. If the Trust
receives the securities of another issuer as the result of a merger or
reorganization of, or a spin-off, or split-up by the issuer of a Security
included in the original Portfolio, the Trust may under certain circumstances
hold those securities as if they were one of the Securities initially deposited
and adjust the proportionate relationship accordingly for all future subsequent
deposits. The sale of additional Units and the sale of Units in the secondary
market may continue even though the Securities would no longer be chosen for
deposit into the Trust if the selection process were to be made at such later
time.
A-3
<PAGE>
THE DOW JONES INDUSTRIAL AVERAGE STOCKS
The Dow Jones Industrial Average is the property of Dow Jones & Company,
Inc., which has not participated in any way in the creation of the Trust or in
the selection of stocks included in the Trust, and has not approved any
information included herein.
The first DJIA, consisting of 12 stocks, was published in The Wall Street
Journal in 1896. The list grew to 20 stocks in 1916 and to 30 stocks on October
1, 1928. Taking into account a number of names changes, 9 of the original
companies are still in the DJIA today. For two periods of 17 consecutive years
each, there were no changes to the list: March 14, 1939-July 1956 and June 1,
1959-August 6, 1976.
CURRENT LIST
Allied Signal
J.P. Morgan & Co. Incorporated
Minnesota Mining
Du Pont
Eastman Kodak
Goodyear
Bethlehem Steel
IBM
General Electric
General Motors
McDonald's
Chevron
Caterpillar
Boeing
Merck
Procter & Gamble
American Express
International Paper
Philip Morris
United Technologies
Sears Roebuck & Company
Exxon
Texaco
Coca-Cola
Union Carbide
Walt Disney
AT&T
Westinghouse Electric
Woolworth
Aluminum Co. of America
The Dow Jones Industrial Average is comprised of 30 common stocks chosen by
the editors of The Wall Street Journal, published by Dow Jones & Company, Inc.,
as representative of the broad market and of American industry. The companies
are major factors in their industries and their stocks are widely held by
individuals and institutional investors.
Changes in the components are made entirely by the editors of The Wall
Street Journal without consultation with the companies, the Sponsor, the stock
exchange or any official agency. For the sake of continuity, such changes are
made rarely. Most substitutions have been the result of mergers, but from time
to time changes may be made to achieve a better representation. Notwithstanding
the foregoing, the components of the Dow Jones Industrial Average may be changed
by Dow Jones & Company, Inc. at any time for any reason.
A-4
<PAGE>
The following table shows the actual performance of the Dow Jones
Industrial Average, the Ten Highest-Yielding Stocks and the Low Five in each of
the past twenty years as of the date indicated for each of such years. Such
annual returns do not take into account commissions, sales charges, expenses or
taxes. As demonstrated by the table, the Low Five outperformed both the Ten
Highest-Yielding Stocks and the DJIA in most of the 20 years.
<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS(1)
------------------------------
TEN
HIGHEST-
YEAR ENDED YIELDING
12/31/ DJIA(2) STOCKS LOW FIVE
- ----------- ------- --------- --------
<S> <C> <C> <C>
1975 44.40 % 55.67 % 68.09 %
1976 22.72 34.94 40.80
1977 -12.71 -1.75 5.64
1978 2.69 0.12 1.25
1979 10.52 12.99 9.91
1980 21.41 27.23 40.52
1981 -3.40 7.52 3.63
1982 25.79 26.04 41.88
1983 25.68 38.91 36.11
1984 1.06 6.43 10.88
1985 32.78 29.44 37.84
1986 26.91 34.79 30.32
1987 6.02 6.07 11.06
1988 15.95 24.54 21.64
1989 31.71 26.45 10.49
1990 -0.57 -7.57 -15.27
1991 23.93 35.09 61.80
1992 7.35 7.85 23.01
1993 16.71 26.92 33.85
1994 4.93 4.15 8.56
</TABLE>
- ------------------
(1) Total Return represents the sum of the percentage change in market value of
each group of stocks between the first trading day of a period and the last
trading day of a period and the total dividends paid on each group of stocks
during the period divided by the opening market value of each group of
stocks as of the first trading day of a period. Total return does not take
into consideration any sales charges, commissions, expenses or taxes.
(2) An index of 30 stocks compiled by Dow Jones.
The total return figures shown above are not guarantees of future
performance and should not be used as a predictor of returns to be expected in
connection with the Portfolio. Such total return figures do not reflect sales
charges, commissions, expenses or taxes. As indicated in the above table, the
Low Five underperformed the Ten Highest-Yielding Stocks and the DJIA in certain
years and there can be no assurance that the Portfolio of the Trust will
outperform the Ten Highest-Yielding Stocks or the DJIA over the life of the
Trust.
A-5
<PAGE>
The chart below represents past performance of the DJIA, the Ten
Highest-Yielding Stocks and the Low Five (but not the Trust) and should not be
considered indicative of future results. From January 1975 through December 1994
the average annual total return for the DJIA, the Ten Highest-Yielding Stocks
and Low Five was 14.31%, 18.71% and 22.40%, respectively. The chart reflects a
hypothetical assumption that $10,000 was invested on January 1, 1975 and the
investment strategy followed for 20 years. The chart assumes that all dividends
during a year are reinvested at the end of that year and does not reflect sales
charges, commissions, expenses or taxes. There can be no assurance that the
Trust will outperform the DJIA or the Ten Highest-Yielding Stocks over its
approximately one-year life or over consecutive rollover periods, if available.
<TABLE>
<CAPTION>
VALUE OF $10,000 INVESTED ON
JANUARY 1, 1975
-------------------------------
TEN
HIGHEST-
YEAR ENDED YIELDING
12/31/ DJIA STOCKS LOW FIVE
- ----------- -------- --------- --------
<S> <C> <C> <C>
1975 $ 14,440 $15,567 $ 16,809
1976 17,721 21,006 23,667
1977 15,468 20,639 25,002
1978 15,885 20,663 25,314
1979 17,556 23,347 27,823
1980 21,314 29,705 39,097
1981 20,590 31,939 40,516
1982 25,900 40,256 57,484
1983 32,551 55,919 78,242
1984 32,896 59,515 86,755
1985 43,679 77,036 119,583
1986 55,433 103,836 155,840
1987 58,770 110,139 173,076
1988 68,144 137,168 210,530
1989 89,752 173,448 232,614
1990 89,241 160,318 197,094
1991 110,596 216,574 318,898
1992 118,725 233,575 392,277
1993 138,564 296,454 525,063
1994 145,395 308,576 570,008
</TABLE>
PORTFOLIO SUMMARY AS OF DATE OF DEPOSIT
The Portfolio contains 5 issues of Securities all of which are traded on
the New York Stock Exchange. The Securities are representative of industry
groups as follows: 20.03%* Petroleum Refining; 20.03%* Consumer/Industrial
Products, Broadcasting; 20.02%* Retail--Department Stores; 20.00%*
Pharmaceutical and 19.92%* Manufacturing.
- ------------------
* Percentages computed on the basis of the aggregate net asset value of the
Securities in the Trust on the Date of Deposit.
A-6
<PAGE>
SUMMARY OF ESSENTIAL INFORMATION
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 1
AS OF APRIL 25, 1995*
<TABLE>
<S> <C>
AGGREGATE VALUE OF SECURITIES.......................... $247,501.50
NUMBER OF UNITS........................................ 250,001
FRACTIONAL UNDIVIDED INTEREST IN THE TRUST REPRESENTED
BY EACH UNIT......................................... 1/250,001
Aggregate value of Securities in the Trust**...... $247,501.50
Divided by 250,001 Units (times 1,000)............ $ 990.00
Plus maximum sales charge of (2.75% of Public
Offering Price, 2.778% of net amount
invested in Securities)***...................... $ 27.50
Less Deferred Sales Charge per 1,000 Units........ (17.50)
-----------
Public Offering Price per 1,000 Units****......... $ 1,000.00
Plus the amount per 1,000 Units in the Income
Account.......................................... $ 0.00
-----------
Total per 1,000 Units........................ $ 1,000.00
-----------
-----------
REDEMPTION AND SPONSOR'S SECONDARY MARKET REPURCHASE
PRICE PER 1,000 UNITS***** (based on the value of the
underlying Securities less the Deferred Sales Charge
per 1,000 Units)..................................... $ 972.50
RECORD DATES: The tenth day of January, April, July and
October.
QUARTERLY DISTRIBUTION DATES: The twenty-fifth day of
January, April, July, and October, or as soon
thereafter as possible.
MINIMUM PRINCIPAL DISTRIBUTION: No distribution need be
made from the Principal Account if the balance
therein is less than $1.00 per 1,000 Units.
TRUSTEE'S FEE AND ESTIMATED EXPENSES: $.97 per 1,000
Units.+
SPONSOR'S PORTFOLIO SUPERVISION FEE+: Maximum of $0.25
per 1,000 Units.
EVALUATION TIME: 4:00 P.M. New York Time
TERMINATION DATE: May 22, 1996++
SPONSOR'S LOSS ON DEPOSIT: $223.75
MINIMUM VALUE OF TRUST: The Indenture may be terminated
if the value of the Trust is less than 40% of the
value of the Securities calculated after the last
deposit of Securities.
DEFERRED SALES CHARGE DEDUCTION DATES: The 1st day of
each month commencing July 1, 1995
</TABLE>
- ------------------
* The Date of Deposit. The Date of Deposit is the date on which the Trust
Indenture and Agreement was signed and the initial deposit of Securities
with the Trustee was made.
** After deduction of the Deferred Sales Charge then payable (zero on the
date of this Summary of Essential Information).
*** The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred
Sales Charge ($17.50 per 1,000 Units) from the aggregate sales charge (a
maximum of 2.75% of the Public Offering Price); thus on the date of this
Summary of Essential Information, the maximum Initial Sales Charge is $10
per 1,000 Units or 1% of the Public Offering Price. The Initial Sales
Charge is deducted from the purchase price at the time of purchase and is
reduced on a graduated basis on purchases of $50,000 or more (see Part
B--'Public Offering of Units-- Volume Discount'). The Deferred Sales
Charge is paid through reduction of the net asset value of the Trust by
$1.75 per 1,000 Units on each Deferred Sales Charge Deduction Date. On a
repurchase or redemption of Units before the last Deferred Sales Charge
Deduction Date, any remaining Deferred Sales Charge payments will be
deducted from the proceeds. Units purchased pursuant to the Reinvestment
Program are subject to that portion of the Deferred Sales Charge remaining
at the time of reinvestment (see Part B--'Reinvestment Program').
**** This price is computed as of the Date of Deposit and may vary from such
price on the date of this Prospectus or any subsequent date.
***** This price is computed as of the Date of Deposit and may vary from such
price on the date of this Prospectus or any subsequent date. Reflects
deductions for remaining Deferred Sales Charge payments ($17.50 per 1,000
Units initially).
+ See: 'Expenses and Charges' herein. The fee accrues monthly and is
payable on each Distribution Date.
Estimated dividends from the Securities, based on the last dividends
actually paid, are expected by the Sponsor to be sufficient to pay the
estimated expenses of the Trust.
++ The Trust may be terminated prior to the Termination Date. See Part
B--'Amendment and Termination of the Indenture-- Termination.' The sale of
Securities will occur during the 10 business day period subsequent to the
Termination Date.
A-7
<PAGE>
FEE TABLE
This Fee Table is intended to help you to understand the costs and expenses
that you will bear directly or indirectly. See Part B--'Public Offering of
Units' and 'Expenses and Charges.' Although each Trust has a term of only
approximately one year, and is a unit investment trust rather than a mutual
fund, this information is presented to permit a comparison of fees, assuming the
principal amount and distributions are rolled over each year into a New Series
subject only to the Deferred Sales Charge.
<TABLE>
<CAPTION>
AMOUNT PER
UNIT HOLDER TRANSACTION EXPENSES 1,000 UNITS
- ------------------------------------------------------- -----------
<S> <C> <C>
Maximum Initial Sales Charge Imposed on Purchase (as a
percentage of offering price)........................ 1.00%(a) $ 1,000.00
Deferred Sales Charge per Year (as a percentage of
original purchase price)............................. 1.75%(b) 17.50
2.75% $ 27.50
Maximum Sales Charge Imposed Per Year on Reinvested
Dividends............................................ $ 17.50(c)
Annual Trust Operating Expenses (as a percentage of
average net assets)
Trustee's Fee........................................ 0.086% $ 0.86
Other Operating Expenses (including Portfolio
Supervision, Bookkeeping and Administrative Fees).... 0.036% 0.36
Total............................................. 0.122% $ 1.22
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
CUMULATIVE
EXPENSES PAID FOR
PERIOD:
-----------------
1 3
YEAR YEARS(D)
------- --------
<S> <C> <C>
An investor would pay the following
expenses on a $1,000 investment,
assuming the Trust's operating expense
ratio of 0.122% and a 5% annual return
on the investment throughout the
periods............................... $ 29 $ 69
</TABLE>
The Example assumes a redemption and reinvestment of all dividends and
distributions and utilizes a 5% annual rate of return as mandated by Securities
and Exchange Commission regulations applicable to mutual funds. For purposes of
the Example, the Deferred Sales Charge imposed on reinvestment of dividends is
not reflected until the year following payment of the dividend; the cumulative
expenses would be higher if sales charges on reinvested dividends were reflected
in the year of reinvestment. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RATE OF RETURN; THE ACTUAL
EXPENSES AND ANNUAL RATE OF RETURN MAY BE MORE OR LESS THAN THOSE ASSUMED FOR
PURPOSES OF THE EXAMPLE.
- ------------------
(a) The Maximum Initial Sales Charge is actually the difference between
2.75% and the Deferred Sales Charge ($17.50 per 1,000 Units) and would exceed 1%
if the Public Offering Price exceeds $1,000 per 1,000 Units.
(b) The actual fee is $1.75 per month per 1,000 Units, irrespective of
purchase or redemption price, deducted in each of the last 10 months of each
one-year Portfolio. If a Holder sells, exchanges or redeems Units before all of
these deductions have been made, the balance of the Deferred Sales Charge will
be deducted from the Unit proceeds. If Unit price exceeds $1 per Unit, the
Deferred Sales Charge will be less than 1.75%; if Unit price is less than $1 per
Unit, the Deferred Sales Charge will exceed 1.75%.
(c) Reinvested dividends will be subject only to the Deferred Sales Charge
remaining at the time of reinvestment (see 'Reinvestment Program' on page B-7).
(d) Although each Trust has a term of only approximately one year and is a
unit investment trust rather than a mutual fund, this information is presented
to permit a comparison of fees, assuming the principal amount and distributions
are rolled over each year into a New Series subject only to the Deferred Sales
Charge.
A-8
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE UNIT HOLDERS, SPONSOR AND TRUSTEE
OF THE NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES 1
We have audited the Statement of Financial Condition and Schedule of
Portfolio Securities of the National Equity Trust Low Five Portfolio Series 1 as
of April 25, 1995. These financial statements are the responsibility of the
Trustee and Sponsor (see note (e) to the statement of financial condition). Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of the irrevocable letter of credit for the purchase of securities,
as shown in the Statement of Financial Condition and Schedule of Portfolio
Securities as of April 25, 1995, by correspondence with United States Trust
Company of New York, the Trustee. An audit also includes assessing the
accounting principles used and significant estimates made by the Trustee, as
well as evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the National Equity Trust
Low Five Portfolio Series 1 as of April 25, 1995, in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
April 25, 1995
A-9
<PAGE>
STATEMENT OF FINANCIAL CONDITION
NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES 1
AS OF DATE OF DEPOSIT, APRIL 25, 1995
TRUST PROPERTY
<TABLE>
<S> <C>
Sponsor's Contracts to Purchase underlying Securities backed
by an irrevocable letter of credit(a)..................... $ 247,501.50
-------------
-------------
LIABILITY AND INTEREST OF UNIT HOLDERS
Liability--
Payment of deferred portion of sales charge(b)......... $ 4,375.02
-------------
Interest of Holders--
Units of fractional undivided interest outstanding:
Cost to investors(c).............................. 250,001.00
Gross underwriting commission(d).................. (6,874.52)
-------------
Net amount applicable to investors.......................... 243,126.48
-------------
Total........................................ $ 247,501.50
-------------
-------------
</TABLE>
- ------------------
(a) The aggregate value of the Securities represented by Contracts to
Purchase listed under 'Schedule of Portfolio Securities' included herein and
their cost to the Trust are the same. An irrevocable letter of credit drawn on
Mellon Bank, N.A. in the amount of $60,000,000.00 has been deposited with the
Trustee for the purchase of Securities pursuant to contracts to purchase such
Securities.
(b) Represents the aggregate amount of mandatory distributions of $1.75 per
1,000 Units per month payable on the 1st day of each month from July 1995
through April 1996. Distributions will be made to an account maintained by the
Trustee from which the Holders' Deferred Sales Charge obligation to the Sponsor
will be satisfied. If Units are redeemed prior to April 1, 1996, the remaining
portion of the distribution applicable to such Units will be transferred to such
account on the redemption date.
(c) The aggregate Public Offering Price is computed on the basis set forth
under 'Public Offering of Units--Public Offering Price.'
(d) The aggregate maximum sales charge of 2.75% of the Public Offering
Price per Unit is computed on the basis set forth under 'Public Offering of
Units--Public Offering Price.'
(e) The Trustee has custody of and responsibility for all accounting and
financial books, records, financial statements and related data of the Trust and
is responsible for establishing and maintaining a system of internal controls
directly related to, and designed to provide reasonable assurance as to the
integrity and reliability of, financial reporting of the Trust. The Trustee is
also responsible for all estimates and accruals reflected in the Trust's
financial statements. The Trustee determines the price for each underlying
Security included in the Trust's Schedule of Portfolio Securities on the basis
set forth in 'Public Offering of Units-- Public Offering Price.' Under the
Securities Act of 1933, as amended (the 'Act'), the Sponsor is deemed to be an
issuer of the Trust's Units. As such, the Sponsor has the responsibility of an
issuer under the Act with respect to financial statements of the Trust included
in the Registration Statement under the Act and amendments thereto.
A-10
<PAGE>
SCHEDULE OF PORTFOLIO SECURITIES
NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES 1
ON DATE OF DEPOSIT, APRIL 25, 1995
<TABLE>
<CAPTION>
CURRENT PERCENTAGE OF
ANNUAL AGGREGATE PRICE COST OF
DIVIDEND NUMBER MARKET PER SECURITIES
PORTFOLIO PER OF VALUE SHARE TO TO
NO. NAME OF ISSUER SHARE(1) SHARES OF TRUST TRUST TRUST(2)
- ---------- ---------------------------------------- -------- ------ ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
1. Chevron Corporation..................... $ 1.85 1052 20.03% $ 47 1/8 $ 49,575.50
2. General Electric Company................ 1.64 889 20.03 55 3/4 49,561.75
3. Sears Roebuck & Company................. 1.60 924 20.02 53 5/8 49,549.50
4. Merck & Company, Inc.................... 1.20 1158 20.00 42 3/4 49,504.50
Minnesota Mining and Manufacturing
5. Company............................... 1.88 834 19.92 59 1/8 49,310.50
-----------
$247,501.50
-----------
-----------
</TABLE>
- ------------------
(1) Based on the latest quarterly or semiannual declaration. There can be no
assurance that future dividend payments, if any, will be maintained on an
amount equal to the dividend listed above.
(2) The Securities were acquired by the Sponsor on April 25, 1995. All
Securities are represented entirely by contracts to purchase. Valuation of
Securities by the Trustee was made on the basis of the closing sale price on
the New York Stock Exchange on April 25, 1995. The aggregate purchase price
to the Sponsor for the Securities deposited in the Trust is $247,725.25.
The Sponsor may have acted as an underwriter, manager or co-manager of a
public offering of the Securities in the Trust during the last three years.
Affiliates of the Sponsor may serve as specialists in the Securities in this
Trust on one or more stock exchanges and may have a long or short position in
any of these stocks or in options on any of these stocks, and may be on the
opposite side of public orders executed on the floor of an exchange where the
Securities are listed. An officer, director or employee of the Sponsor may be an
officer or director of one or more of the issuers of the Securities in the
Trust. The Sponsor may trade for its own account as an odd-lot dealer, market
maker, block positioner and/or arbitrageur in any of the Securities or options
relating thereto. The Sponsor, its affiliates, directors, elected officers and
employee benefits programs may have either a long or short position in any
Security or option relating thereto.
A-11
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROSPECTUS--PART B:
- --------------------------------------------------------------------------------
Note that Part B of this Prospectus may not be distributed unless accompanied by
Part A.
- --------------------------------------------------------------------------------
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 1
THE TRUST
National Equity Trust, Low Five Portfolio Series 1 (the 'Trust') is one of
a series of similar but separate unit investment trusts created by the Sponsor.
The Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Agreement and a related Reference Trust Agreement dated the
Date of Deposit (collectively, the 'Indenture'),* between Prudential Securities
Incorporated (the 'Sponsor') and United States Trust Company of New York (the
'Trustee'). On the Date of Deposit, the Sponsor deposited with the Trustee
common stock issued by the five companies whose common stocks are the five
lowest dollar price per share common stocks of the ten common stocks in the Dow
Jones Industrial Average having the highest dividend yield on the date set forth
on page A-1 (collectively, the 'Securities' or, singularly, the 'Security,' as
the context requires) and/or contracts and funds (represented by irrevocable
letter(s) of credit issued by major commercial bank(s)) for the purchase of such
equity securities at prices which reflect the value of the Securities as of the
close of the market as of the Date of Deposit and/or cash (or a letter of credit
in lieu of cash) with instructions to the Trustee to purchase such Securities
(see Schedule of Portfolio Securities). The Trustee then immediately delivered
to the Sponsor the units (the 'Units') comprising the entire ownership of the
Trust as of the Date of Deposit which Units the Sponsor, through this
Prospectus, is offering for sale to the public. Each such Unit represented on
the initial Date of Deposit an identical number and type of shares in identical
issuers.
The objective of the Trust is total return through an investment for
approximately one year in a portfolio of the five lowest dollar price per share
common stocks of the ten common stocks in the Dow Jones Industrial Average
having the highest dividend yield as of a date on or shortly before the Date of
Deposit (the 'Low Five'). There can be no assurance that such objective can be
realized. The factors affecting the value of the Securities are those factors
that have an impact upon the value of equity securities in general and those
factors that affect the economic and financial condition of each issuer of a
Security in particular.
Subsequent to the initial deposit of Securities on the Date of Deposit, the
Sponsor may, but is not obligated to, deposit from time to time additional
Securities (including contracts together with an irrevocable letter of credit
for the purchase thereof) and/or cash (or a letter of credit in lieu of cash)
with instructions to the Trustee to purchase additional Securities in the Trust,
to receive in exchange therefor additional Units, and to offer such Units to the
public by means of this Prospectus. Any such additional deposits during the 90
day period subsequent to the Date of Deposit will be in amounts which maintain,
to the extent practicable, the original proportionate relationship between the
number of shares of each Security in the Portfolio of the Trust. It may not be
possible to maintain the exact original proportionate relationship because of,
among other reasons, purchase requirements, price changes or unavailability of
Securities. In connection with the deposit by the Sponsor of cash (or a letter
of credit in lieu of cash) with instructions to purchase additional Securities
in order to create Additional Units, to the extent that the price of a Security
fluctuates between the time the cash is deposited and the time the cash is used
to purchase the Security, Units may represent more or less of that Security and
more or less of other Securities in the Portfolio of the Trust. In addition, the
brokerage fees incurred in purchasing Securities with such deposited cash will
be borne by the Trust. Any Unit Holder who purchased Units prior to the purchase
of Securities with such deposited cash would experience dilution as a result of
any such brokerage fees. Any cash deposited with instruction to purchase
Securities not used to purchase Securities and any interest not used to pay
Trust expenses will be distributed to Unit Holders on the earlier of the first
Distribution Date or 90 days after the Date of Deposit. Additional Units may be
continuously offered for sale to the public by means of this Prospectus.
Subsequent to the 90 day period following the Date of Deposit any deposit of
additional Securities and cash must exactly replicate the Portfolio immediately
prior to such deposit. The Sponsor may acquire large volumes of additional
Securities for deposit into the Trust over a short period of time. Such
acquisitions may tend to raise the market prices of these Securities. The
Sponsor cannot currently predict the actual market impact of the Sponsor's
purchases of additional Securities, because the actual volume of Securities to
be purchased and the supply and price of such Securities is not known. As
additional Units are issued by the Trust as a result of the deposit of
additional Securities by the Sponsor, the aggregate value of the Securities in
the Trust will be increased and the fractional undivided interest in the Trust
represented by each Unit will be decreased.
The Sponsor may deposit additional Securities and may continue to sell
Units of the Trust even though one or more of the Securities no longer remains
among the Low Five on the date of deposit of the additional Securities.
- ------------------
* Reference is hereby made to said Indenture and any statements contained herein
are qualified in their entirety by the provisions of said Indenture.
B-1
<PAGE>
Notwithstanding the availability of the above-mentioned irrevocable
letter(s) of credit, it is expected that the Sponsor will pay for the Securities
as the contracts for their purchase become due. A substantial portion of such
contracts have not become due by the date of this Prospectus. To the extent
Units are sold prior to the settlement of such contracts, the Sponsor will
receive the purchase price of such Units prior to the time at which it pays for
Securities pursuant to such contracts and have the use of such funds during this
period.
Units will be sold to investors at the Public Offering Price next computed
after receipt of the investor's order to purchase Units, if Units are available
to fill orders on the day that that price is set. If Units are not available or
are insufficient to fill the order, the investor's order will be rejected by the
Sponsor. The number of Units available may be insufficient to meet demand
because of the Sponsor's inability to or decision not to purchase and deposit
underlying Securities in amounts sufficient to maintain the proportionate
numbers of shares of each Security as required to create additional Units. The
Sponsor may, if unable to accept orders on any given day, offer to execute the
order as soon as sufficient Units can be created. An investor who agrees to this
will be deemed to place a new order for that number of Units each day until that
order is accepted. The investor's order will then be executed, when Units are
available, at the Public Offering Price next calculated after such continuing
order is accepted. The investor will, of course, be able to revoke his purchase
offer at any time prior to acceptance by the Sponsor. The Sponsor will execute
orders to purchase in the order it determines that they are received, i.e.,
orders received first will be filled first, except that indications of interest
prior to the effectiveness of the registration of the offering of Trust Units
which become orders upon effectiveness will be accepted according to the order
in which the indications of interest were received.
The holders of Units (the 'Unit Holders' or 'Unit Holder,' as the context
requires) will have the right to have their Units redeemed at a price based on
the net asset value (the 'Redemption Price') if they cannot be sold in the
secondary market which the Sponsor, although not obligated to do so, proposes to
maintain. The Sponsor, Prudential Securities Incorporated, is a wholly-owned,
indirect subsidiary of The Prudential Insurance Company of America. The Trust
has a mandatory termination date set forth under Part A--'Summary of Essential
Information,' but may be terminated prior thereto upon the occurrence of certain
events (see 'Amendment and Termination of the Indenture--Termination'),
including a reduction in the value of the Trust below the value set forth under
Part A--'Summary of Essential Information.'
On the Date of Deposit, a Unit represented the fractional undivided
interest in the Securities set forth under Part A-- 'Summary of Essential
Information' in the ratio of 1 Unit for each approximately $1.00 net asset value
of Securities initially deposited in such Trust. If any Units are redeemed by
the Trustee, the number of Securities in the Trust will be reduced by an amount
allocable to redeemed Units and the fractional undivided interest in such Trust
represented by each unredeemed Unit will be increased. Units will remain
outstanding until redeemed upon tender to the Trustee by any Unit Holder (which
may include the Sponsor) or until the termination of the Trust pursuant to the
Indenture.
PORTFOLIO SUMMARY
Since the Trust consists of common stocks, an investment in Units of the
Trust should be made with an understanding of the risks inherent in any
investment in common stock. The risks of investing in common stock include risks
associated with the rights to receive payments from the issuer which are
generally inferior to creditors of, or holders of debt obligations or preferred
stocks issued by, the issuer. Holders of common stock have a right to receive
dividends only when and if, and in the amounts, declared by the issuer's board
of directors and to participate in amounts available for distribution by the
issuer only after all other claims on the issuer have been paid or provided for.
By contrast, holders of preferred stocks have the right to receive dividends at
a fixed rate when and as declared by the issuer's board of directors, normally
on a cumulative basis. Dividends on cumulative preferred stock must be paid
before any dividends are paid on common stock and any cumulative preferred stock
dividend which has been omitted is added to future dividends payable to the
holders of such cumulative preferred stock. Preferred stocks are also entitled
to rights on liquidation which are senior to those of common stock. For these
reasons, preferred stocks generally entail less risk than common stock.
Moreover, common stock does not represent an obligation of the issuer and
therefore does not offer any assurance of income or provide the degree of
protection of capital of debt securities. The issuance of debt securities or
even preferred stock by an issuer will create prior claims for payment of
principal, interest and dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common stock or the
rights of holders of common stock with respect to assets of the issuer upon
liquidation or bankruptcy. Further, unlike debt securities which typically have
a stated principal amount payable at maturity (which value will be subject to
market fluctuations prior thereto), common stock has neither a fixed principal
amount nor a maturity and has a value which is subject to market fluctuations
for as long as the common stock remains outstanding. The value of the common
stocks in the Trust thus may be expected to fluctuate over the life of the Trust
to values higher or lower than those prevailing on the Date of Deposit.
The value of the Units will fluctuate depending on all the factors that
have an impact on the economy and the equity markets. These factors similarly
impact on the ability of an issuer to distribute dividends. There is no
assurance that any dividends will be declared or paid in the future on the
Securities. The Trust is not a 'managed' registered investment company and
Securities will
B-2
<PAGE>
not be sold by the Trustee as a result of ordinary market fluctuations. The
Sponsor may direct the disposition by the Trustee of Securities only upon the
occurrence of certain events. (See 'Sponsor--Responsibility.')
As it is anticipated that Securities generally will not be sold to pay the
Deferred Sales Charge until after the last Deferred Sales Charge Deduction Date,
Holders will be at risk with respect to changes in the market value of
Securities between the accrual of each monthly deferred sales charge and the
actual sale of Securities to satisfy the payment of the Deferred Sales Charge.
The Trust consists of the Securities (and/or contracts to purchase such
Securities together with an irrevocable letter or letters of credit for the
purchase of such contracts and/or cash (or a letter of credit in lieu of cash)
with instructions to purchase such Securities) listed under Part A--'Schedule of
Portfolio Securities' herein, and the Securities deposited upon the creation of
additional Units as set forth above and substitute Securities acquired by the
Trust as long as such Securities may continue to be held from time to time in
the Trust together with uninvested cash realized from the disposition of
Securities. Neither the Sponsor nor the Trustee will be liable in any way for
any default, failure or defect in any Securities.
All of the Securities are publicly traded on the New York Stock Exchange.
The contracts to purchase Securities deposited initially in the Trust are
expected to settle in five business days, in the ordinary manner for such
Securities. Settlement of the contracts for Securities is thus expected to take
place prior to the settlement of Units purchased on the date of this prospectus.
TAX STATUS OF THE TRUST
In the opinion of Cahill Gordon & Reindel, special counsel for the
Sponsor, under existing Federal income tax law:
The Trust is not an association taxable as a corporation for Federal
income tax purposes, and income received by the Trust will be treated as
income of the Unit Holders in the manner set forth below.
Each Unit Holder will be considered the owner of a pro rata portion of
each asset in the Trust under the grantor trust rules of Sections 671-678
of the Internal Revenue Code of 1986, as amended (the 'Code'). A Unit
Holder should determine the tax cost for each asset represented by the
Holder's Units by allocating the total cost for such Units (including the
Initial Sales Charge) among the assets in the Trust represented by the
Units in proportion to the relative fair market values thereof on the date
the Unit Holder purchases such Units. The proceeds received by a Unit
Holder upon termination of the Trust or redemption of Units will reflect
the actual amounts paid to them, net of the Deferred Sales Charge. The
relevant tax reporting forms sent to Unit Holders will reflect the actual
amount paid to them net of the Deferred Sales Charge. Accordingly, Unit
Holders should not increase the total cost for their Units by the amount of
the Deferred Sales Charge.
A Unit Holder will be considered to have received all of the dividends
paid on the Holder's pro rata portion of each Security when such dividends
are received by the Trust. In the case of a corporate Unit Holder, such
dividends will qualify for the 70% dividends received deduction for
corporations to the same extent as though the dividend paying stock were
held directly by the corporate Unit Holder. An individual Unit Holder who
itemizes deductions will be entitled to an itemized deduction for the
Holder's pro rata share of fees and expenses paid by the Trust as though
such fees and expenses were paid directly by the Unit Holder, but only to
the extent that this amount together with the Unit Holder's miscellaneous
deductions exceeds 2% of the Holder's adjusted gross income. A corporate
Unit Holder will not be subject to this 2% floor.
Under the position taken by the Internal Revenue Service in Revenue
Ruling 90-7, a distribution by the Trustee to a Unit Holder (or to the
Distribution Agent as the Holder's agent) of such Holder's pro rata share
of the Securities in kind upon redemption or termination of the Trust will
not be a taxable event to the Unit Holder. Such Unit Holder's basis for
Securities so distributed will be equal to the Holder's basis for the same
Securities (previously represented by the Holder's Units) prior to such
distribution and the holding period for such Securities will be the shorter
of the period during which the Unit Holder held the Units and the period
for which the Securities were held in the Trust. A Unit Holder will have a
taxable gain or loss, which will be a capital gain or loss except in the
case of a dealer, when the Unit Holder disposes of such Securities in a
taxable transfer.
Under the income tax laws of the State and City of New York, the Trust
is not an association taxable as a corporation and the income of the Trust
will be treated as the income of the Unit Holders.
If the proceeds received by the Distribution Agent upon the sale or
redemption of an underlying Security exceed a Unit Holder's adjusted tax cost
allocable to the Security disposed of, that Unit Holder will realize a taxable
gain to the extent of such excess. Conversely, if the proceeds received by the
Distribution Agent upon the sale or redemption of an underlying Security are
less than a Unit Holder's adjusted tax cost allocable to the Security disposed
of, that Unit Holder will realize a loss for tax purposes to the extent of such
difference except that upon reinvestment of proceeds in a New Series the
Internal Revenue Service may seek to disallow such loss to the extent that the
underlying securities in each trust are substantially identical and the purchase
of units of the New Series takes place less than thirty-one days after the sale
of the underlying Security. Under the Code, net capital gain (i.e., the excess
of net long-term capital gain over net short-term capital loss) of individuals,
estates and trusts is subject to a maximum
B-3
<PAGE>
nominal tax rate of 28%. Such net capital gain may, however, result in a
disallowance of itemized deductions and/or affect a personal exemption
phase-out.
Each Unit Holder should consult his, her or its tax advisor with respect to
the application of the above general information to his, her or its own personal
situation.
RETIREMENT PLANS
Units of the Trust may be suited for purchase by Individual Retirement
Accounts and pension plans or profit sharing and other qualified retirement
plans. Investors considering participation in any such plan should review
specific tax laws and pending legislation relating thereto and should consult
their attorneys or tax advisors with respect to the establishment and
maintenance of any such plan.
PUBLIC OFFERING OF UNITS
PUBLIC OFFERING PRICE
The Public Offering Price of the Units during the initial public offering
period and thereafter is computed by determining the value (as set forth below)
of the Securities in the Trust, dividing such sum by the number of Units
outstanding and then adding a sales charge as set forth in the table under
'Volume Discount,' herein. In order to enable purchasers of Units on the date of
this Prospectus to purchase Units at a Public Offering Price of $1.00 per Unit,
the Units outstanding as of the Evaluation Time on the date of this Prospectus
(all of which are held by the Sponsor) may be split (or split in reverse). A
proportionate share of money in the Income and Principal Accounts and amounts
receivable in respect of stocks trading ex-dividend other than money required to
redeem previously tendered Units or money required to be distributed to Unit
Holder, on a Distribution Date will be added to the Public Offering Price. (See
'Rights of Unit Holders--Distributions.')
The Public Offering Price on the date of this Prospectus or on any
subsequent date will vary from the Public Offering Price as of the Date of
Deposit set forth in the 'Summary of Essential Information' in accordance with
fluctuations in the value of the Securities in the Trust.
The aggregate value of the Securities is determined in good faith by the
Trustee on each 'Business Day' as defined in the Indenture in the following
manner: the evaluation is generally based on the closing trade prices on the New
York Stock Exchange as of the Evaluation Time (unless the Trustee deems these
prices inappropriate as a basis for valuation) or, if there is no closing trade
price at that time on that exchange, at the mean between the closing bid and
asked prices. If the Securities are not so listed or, if so listed and the
principal market therefor is other than on the exchange, the evaluation shall
generally be based on the current bid price on the over-the-counter market
(unless the Trustee deems these prices inappropriate as a basis for evaluation).
If current bid or closing prices are unavailable, the evaluation is determined
(a) on the basis of current bid prices for comparable securities, (b) by
appraising the value of the Securities on the bid side of the market or by such
other appraisal deemed appropriate by the Trustee, (c) on the basis of the last
trade price of the Security or (d) by any combination of the above, each as of
the Evaluation Time.
The sales charge consists of an Initial Sales Charge and a Deferred Sales
Charge. The Initial Sales Charge is computed by deducting the Deferred Sales
Charge ($17.50 per 1,000 Units) from the aggregate sales charge; thus on the
date of the Summary of Essential Information, the maximum Initial Sales Charge,
1% of the Public Offering Price, is $10 per 1,000 Units. The Initial Sales
Charge is deducted from the purchase price at the time of purchase. The Deferred
Sales Charge will initially be $17.50 per 1,000 Units but will be reduced each
month by one tenth; the Deferred Sales Charge will be paid through monthly
deductions of $1.75 per 1,000 Units per month commencing on the first Deferred
Sales Charge Deduction Date as shown on page A-7. To the extent the entire
Deferred Sales Charge has not been so deducted at the time of repurchase,
redemption or exchange of the Units, any unpaid amount will be deducted from the
proceeds or in calculating an in kind distribution. For purchases of Units with
a value of $50,000 or more, the Initial Sales Charge is reduced on a graduated
basis as shown below under 'Volume Discount.' Units purchased pursuant to the
Reinvestment Program are subject only to any remaining Deferred Sales Charge
deductions (see 'Reinvestment Program').
PUBLIC DISTRIBUTION
During the initial public offering period (i) for Units issued on the Date
of Deposit and (ii) for additional Units issued after such date in respect of
additional deposits of Securities, Units will be distributed to the public by
the Sponsor and through dealers at the Public Offering Price, calculated on each
business day. The initial offering period is 30 days unless all Units are sold
prior thereto, whereupon the initial public offering period will terminate. The
initial public offering period may be extended by the Sponsor so long as
additional deposits are being made or Units remain unsold. Upon termination of
the initial offering period, in
B-4
<PAGE>
each case, unsold Units or Units acquired by the Sponsor in the secondary market
referred to below may be offered to the public by this Prospectus at the then
current Public Offering Price calculated daily.
The Sponsor intends to qualify Units in states selected by the Sponsor for
sale by the Sponsor and through dealers who are members of the National
Association of Securities Dealers, Inc. Sales to dealers will be made at prices
which include a concession of 65% of the total sales charge per Unit, but
subject to change from time to time at the discretion of the Sponsor. The
Sponsor reserves the right to reject, in whole or in part, any order for the
purchase of Units.
SECONDARY MARKET
While not obligated to do so, it is the Sponsor's present intention to
maintain a secondary market for Units of the Trust and to offer continuously to
repurchase Units from Unit Holders at the Sponsor's Repurchase Price which
price, subject to change at any time, will be computed as stated under 'Rights
of Unit Holders--Redemption--Computation of Redemption Price.' The Sponsor, of
course, does not in any way guarantee the enforceability, marketability or price
of any Securities in the Portfolio or of the Units. There is no sales charge
incurred when a Unit Holder sells Units back to the Sponsor. Any Units
repurchased by the Sponsor may be reoffered to the public by the Sponsor at the
then current Public Offering Price. The Sponsor will become the owner of Units
repurchased as of the trade date. Any profit or loss resulting from the resale
of such Units will belong to the Sponsor.
If the supply of Units exceeds demand (or for any other business reason),
the Sponsor may, at any time, occasionally, from time to time, or permanently,
discontinue the repurchase of Units. In such event Unit Holders wishing to
dispose of their Units may redeem their Units through the Trustee. (See 'Rights
of Unit Holders--Redemption--Computation of Redemption Price per Unit.') If the
Sponsor repurchases Units in the secondary market at the 'Redemption Price,' it
may reoffer these units in the secondary market at the 'Public Offering Price,'
or the Sponsor may tender Units so purchased to the Trustee for redemption. In
no event will the price offered by the Sponsor for the repurchase of Units be
less than the current Redemption Price for those Units. (See 'Rights of Unit
Holders--Redemption.') The Sponsor may, of course, redeem any Units that it has
purchased in the secondary market to the extent that it determines that it is
undesirable to continue to hold such Units in its inventory. Factors which the
Sponsor will consider in making such a determination will include the number of
units of all series of unit trusts which it has in its inventory, the
saleability of such units and its estimate of the time required to sell such
units and general market conditions.
PROFIT OF SPONSOR
The Sponsor receives a sales charge as set forth in the table below in the
primary market and secondary market. The Sponsor may have also realized a book
profit (or a loss) on the deposit of the Securities in the Trust representing
the difference between the cost of the Securities to the Sponsor and the cost of
the Securities to the Trust. (For the amount of such difference on the initial
deposit, see Part A--'Summary of Essential Information.') The Sponsor may also
realize profits or sustain losses in respect of Securities which were acquired
from the Sponsor or from underwriting syndicates of which it was a member. (See
Part A-- 'Portfolio Summary as of the Date of Deposit.') An underwriter or
underwriting syndicate purchases common stock from the issuer on a negotiated or
competitive bid basis as principal with the motive of marketing such common
stock to investors at a profit. In addition, the Sponsor may realize profits (or
sustain losses) due to daily fluctuations in the value of the Securities in the
Trust and thus in the Public Offering Price of Units received by the Sponsor.
Cash, if any, received by the Sponsor from the Unit Holders prior to the
settlement date for purchase of Securities may be used in the Sponsor's business
to the extent permitted by applicable regulations and may be of benefit to the
Sponsor.
The Sponsor may also realize profits (or sustain losses) while maintaining
a secondary market in the Units, in the amount of any difference between the
prices at which the Sponsor buys Units and the prices at which the Sponsor
resells such Units or the prices at which the Sponsor redeems such Units, as the
case may be.
VOLUME DISCOUNT
Although under no obligation to do so, the Sponsor intends to permit volume
purchasers of Units to purchase Units at a reduced sales charge. The Sponsor may
at any time upon prior notice to Unit Holders change the amount by which the
sales charge is reduced, or may discontinue the discount altogether.
The sales charge for the Trust in the primary market will be reduced
pursuant to the following graduated scale for sales to any person of Units with
a value of $50,000 or more. The sales charge in the secondary market consists of
an Initial Sales Charge which will be reduced pursuant to the following
graduated scale and the remaining portions of the Deferred Sales Charge.
B-5
<PAGE>
<TABLE>
<CAPTION>
PRIMARY MARKET SECONDARY MARKET
------------------------------------ ----------------------
PERCENT OF DEFERRED PERCENT OF
PUBLIC PERCENT OF SALES CHARGE PUBLIC PERCENT OF
OFFERING NET AMOUNT PER 1,000 OFFERING NET AMOUNT
PURCHASES PRICE INVESTED UNITS PRICE INVESTED
- ------------------- ---------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Less than
$50,000.......... 2.75% 2.778% $ 17.50 1.00% 1.010%
$50,000-$99,999.... 2.50% 2.519% 17.50 0.75% 0.756%
$100,000-$249,999... 2.00% 2.005% 17.50 0.50% 0.503%
$250,000 or more... * * 17.50 0.25% 0.251%
</TABLE>
- ------------------
* Deferred Sales Charge only.
The reduced sales charges as shown on the chart above will apply to such
purchases of Units in any fourteen-day period which qualify for the volume
discount by the same person, including a partnership or corporation, other than
a dealer, in the amounts stated herein, and for this purpose, purchases of Units
of this Trust will be aggregated with concurrent purchases of Units of any other
trust that may be offered by the Sponsor.
Units held in the name of the purchaser's spouse, in the name of a
purchaser's child under the age of 21 or in the name of an entity controlled by
the purchaser are deemed for the purposes hereof to be acquired in the name of
the purchaser. The reduced sales charges are also applicable to a trustee or
other fiduciary, including a partnership or corporation, purchasing Units for a
single trust estate or single fiduciary account.
EMPLOYEE DISCOUNT
The Sponsor intends, at the discretion of the Sponsor, to permit employees
of Prudential Securities Incorporated and its subsidiaries and affiliates to
purchase Units of the Trust at a price equal to the net asset value of the
Securities in the Trust divided by the number of Units outstanding plus a
reduced sales charge equal to the Deferred Sales Charge per Unit, subject to a
limit of 5% of the Units.
EXCHANGE OPTION
Unit Holders may elect to exchange any or all of their Units of this Series
of the National Equity Trust for units of one or more of any other series in the
Prudential Securities Incorporated family of unit investment trusts or for any
units of any additional trusts that may from time to time be made available for
such exchange by the Sponsor (collectively referred to as the 'Exchange
Trusts'). Such units may be acquired at prices based on reduced sales charges
per unit. The purpose of such reduced sales charge is to permit the Sponsor to
pass on to the Unit Holder who wishes to exchange Units the cost savings
resulting from such exchange of Units. The cost savings result from reductions
in the time and expense related to advice, financial planning and operational
expense required for the Exchange Option.
Exchange Trusts may have different investment objectives; a Unit Holder
should read the prospectus for the applicable Exchange Trust carefully to
determine its investment objective prior to exercise of this option.
This option will be available provided the Sponsor maintains a secondary
market in both the Units of this Series and units of the applicable Exchange
Trust and provided that units of the applicable Exchange Trust are available for
sale and are lawfully qualified for sale in the jurisdiction in which the Unit
Holder is a resident. While it is the Sponsor's present intention to maintain a
secondary market for the units of all such trusts, there is no obligation on its
part to do so. Therefore, there is no assurance that a market for units will in
fact exist on any given date on which a Unit Holder wishes to sell or exchange
his Units; thus there is no assurance that the Exchange Option will be available
to any Unit Holder. The Sponsor reserves the right to modify, suspend or
terminate this option. Sixty days notice will be given prior to the date of the
termination of or a material amendment to the Exchange Option except that no
notice need be given in certain circumstances approved by the Securities and
Exchange Commission. In the event the Exchange Option is not available to a Unit
Holder at the time he wishes to exercise it, the Unit Holder will be immediately
notified and no action will be taken with respect to his Units without further
instruction from the Unit Holder.
To exercise the Exchange Option, a Unit Holder should notify the Sponsor of
his desire to exchange his Units for one or more units of the Exchange Trusts.
Upon the exchange of Units of the Trust, any Deferred Sales Charge balance will
be deducted from the exchange proceeds. If units of the applicable outstanding
series of the Exchange Trust are at that time available for sale, the Unit
Holder may select the series or group of series for which he desires his Units
to be exchanged. The Unit Holder will be provided with a current prospectus or
prospectuses relating to each series in which he indicates interest.
Units of the Exchange Trust trading in the secondary market maintained by
the Sponsor, if so maintained, will be sold to the Unit Holder at a price equal
to the aggregate bid side evaluation per unit of the securities in that
portfolio and the applicable sales charge of $15 per unit of the Exchange Trust
for a trust with a 1 unit minimum purchase. The reduced sales charge for units
of any Exchange Trust acquired during the initial offering period for such units
will result in a price for such units equal to the offering side evaluation per
unit of the securities in the Exchange Trust's portfolio plus accrued interest,
if any, plus a reduced sales charge of $25 per Exchange Trust unit. Exchange
transactions will be effected only in whole units; thus, any proceeds not used
to acquire
B-6
<PAGE>
whole units will be paid to the exchanging Unit Holder unless the Unit Holder
adds the amount of cash necessary to purchase one additional whole Exchange
Trust unit.
Owners of units of any registered unit investment trust, other than
Prudential Securities Incorporated sponsored trusts, which was initially offered
at a minimum applicable sales charge of 3.0% of the public offering price
exclusive of any applicable sales charge discounts, may elect to apply the cash
proceeds of sale or redemption of those units directly to acquire units of any
Exchange Trust trading in the secondary market at the reduced sales charge of
$20 per Unit, subject to the terms and conditions applicable to the Exchange
Option. Units of any Exchange Trust acquired during the initial offering period
for such units may be sold at a price equal to the ask side evaluation per unit
of the securities in the Portfolio plus a reduced sales charge of $25 per unit.
To exercise this option, the owner should notify his retail broker. He will be
given a prospectus of each series in which he indicates interest, units of which
are available. The Sponsor reserves the right to modify, suspend or terminate
the option at any time without further notice, including the right to increase
the reduced sales charge applicable to this option (but not in excess of $5 more
per unit than the corresponding fee then charged for a unit of an Exchange Trust
which is being exchanged).
For example, assume that a Unit Holder, who has three units of a Trust with
a 4.25% sales charge and a current price of $1,100 per unit, sells his units and
exchanges the proceeds for units of a series of an Exchange Trust with a current
price of $950 per unit and an ordinary sales charge of 4.25%. The proceeds from
the Unit Holder's units will aggregate $3,300. Since only whole units of an
Exchange Trust may be purchased under the Exchange Option, the Holder would be
able to acquire four units in the Exchange Trust for a total cost of $3,860
($3,800 for units and $60 for the $15 per unit sales charge) by adding an extra
$560 in cash. Were the Unit Holder to acquire the same number of units at the
same time in the regular secondary market maintained by the Sponsor, the price
would be $3,968.68 [$3,800 for the units and $168.68 for the 4.25% sales charge
(4.439% of the net amount invested)].
FEDERAL INCOME TAX CONSEQUENCES
An exchange of Units pursuant to the Exchange Option will constitute a
'taxable event' under the Code, i.e., a Unit Holder will recognize gain or loss
at the time of the exchange except that upon an exchange of Units of this Series
of the National Equity Trust for units of any other series of the Exchange
Trusts which are grantor trusts for United States federal income tax purposes
the Internal Revenue Service may seek to disallow any loss incurred upon such
exchange to the extent that the underlying securities in each trust are
substantially identical and the purchase of units of an Exchange Trust takes
place less than thirty-one days after the sale of the Units. Unit Holders are
advised to consult their own tax advisors as to the tax consequences of
exchanging Units in their particular case.
REINVESTMENT PROGRAM
Unit Holders may elect to have the distributions with respect to their
Units automatically reinvested in additional Units of the Trust subject only to
any remaining deductions of the Deferred Sales Charge. (Reinvestment Units are
not subject to the Initial Sales Charge.)
The Unit Holder may participate in the Trust's reinvestment program (the
'Program') by filing with the Trustee a written notice of election. The Unit
Holder's completed notice of election to participate in the Program must be
received by the Trustee at least ten days prior to the Record Date applicable to
any distribution in order for the Program to be in effect as to such
distribution. Elections may be modified or revoked on similar notice.
Such distributions, to the extent reinvested in the Trust, will be used by
the Trustee at the direction of the Sponsor in one or both of the following
manners. (i) The distributions may be used by the Trustee to purchase Units of
this Series of the Trust held in the Sponsor's inventory. The purchase price
payable by the Trustee for each of such Units will be equal to the applicable
Trust evaluation per Unit on (or as soon as possible after) the close of
business on the Distribution Date. The Units so purchased by the Trustee will be
issued or credited to the accounts of Unit Holders participating in the Program.
(ii) If there are no Units in the Sponsor's inventory, the Sponsor may purchase
additional Securities for deposit into the Trust (as described in Part B, 'The
Trust'). The additional Securities with any necessary cash will be deposited by
the Sponsor with the Trustee in exchange for new Units. The distributions may
then be used by the Trustee to purchase the new Units from the Sponsor. The
price for such new Units will be the applicable Trust evaluation per Unit on (or
as soon as possible after) the close of business on the Distribution Date. (See
'Public Offering of Units--Public Offering Price.') The Units so purchased by
the Trustee will be issued or credited to the accounts of Unit Holders
participating in the Program. The Sponsor may terminate the Program if it does
not have sufficient Units in its inventory or if it is no longer deemed
practical to create additional Units.
No fractional Units will be issued under any circumstances. If, after the
maximum number of full Units has been issued or credited at the applicable
price, there remains a portion of the distribution which is not sufficient to
purchase a full Unit at such price, the Trustee will distribute such cash to
Unit Holders. The cost of administering the reinvestment program will be borne
by the Trust and thus will be borne indirectly by all Unit Holders.
B-7
<PAGE>
TERMINATION OPTIONS
The Trust will terminate on the Termination Date set forth in the Summary
of Essential Information, approximately one year after the Date of Deposit
(unless terminated earlier; see part B--'Amendment and Termination of the
Indenture--Termination'). A Unit Holder's Units will be redeemed in kind on the
Termination Date by distribution of the Unit Holder's pro rata share of the
Securities and any cash in the Portfolio of the Trust on such date to the
Distribution Agent who will act as agent for such Unit Holder.
SECURITIES DISPOSITION OPTIONS--A Unit Holder who so elects by notifying
the Trustee prior to the Termination Date of the Trust will have the Securities
received on the Termination Date disposed of on behalf of such Unit Holder by
the Distribution Agent in accordance with one or more of the following three
options as elected by such Unit Holder:
1. to have such underlying Securities distributed in kind no later
than the business day next following the Termination Date. Unit Holders
subsequently selling such distributed Securities will incur brokerage costs
when disposing of such Securities;
2. to receive the Unit Holder's pro rata share of the cash received
by the Distribution Agent (less expenses) upon the sale by the Distribution
Agent of the underlying Securities attributable to Unit Holders electing
this option over a period not to exceed 10 business days immediately
following the Termination Date. Amounts received by the Distribution Agent
over such 10 business day period representing the proceeds of the
underlying Securities sold will be held by the United States Trust Company
in accounts which are non-interest bearing to Unit Holders and which are
available for use by the United States Trust Company pursuant to normal
banking procedures and will be distributed to Unit Holders within 5
business days after the settlement of the trade for the last Security to be
sold; and/or
3. to invest the proceeds from the sale of the underlying Securities
attributable to Unit Holders electing this option within 30 days of the
Termination Date, as received by the Distribution Agent upon the sale of
such underlying Securities over a period not to exceed 10 business days
immediately following the Termination Date, in units of a subsequent series
of National Equity Trust as designated by the Sponsor (the 'New Series') if
such New Series is offered at such time. The Units of a New Series will be
purchased by the Unit Holder upon the settlement of the trade for the last
Security to be sold. Such purchaser will be entitled to a reduced sales
load upon the purchase of units of the New Series. It is expected that the
terms of the New Series will be substantially the same as the terms of the
Trust described in this Prospectus, and that similar options in a
subsequent series of the Trust will occur in each New Series of the Trust
approximately one year after that New Series' creation. The availability of
this option does not constitute a solicitation of an offer to purchase
Units of a New Series or any other security. A Unit Holder's election to
participate in this option will be treated as an indication of interest
only. At any time prior to the purchase by the Unit Holder of units of a
New Series, such Unit Holder may change his investment strategy and
receive, in cash, the proceeds of the sale of the Securities.
Unit Holders who do not elect as set forth above will have their Units
redeemed on the Termination Date and be deemed to have elected to receive the
cash proceeds from the sale of such Unit Holder's pro rata share of the
underlying Securities (option 2).
Under each option a Unit Holder will receive the Redemption Price per Unit
(net asset value) determined as of the Evaluation Time on the Termination Date.
The Distribution Agent will sell the underlying Securities in the case of the
second and third option over a period not to exceed 10 business days immediately
following the Termination Date. The proceeds of any such sales will be reduced
by any applicable brokerage commissions. The sale arrangement is one in which
United States Trust Company will be selling the Securities as agent for the Unit
Holder and is separate from the Trust which terminates on the Termination Date.
The proceeds of such sales may be more or less than the value of the Securities
on the Termination Date. The Sponsor, on behalf of the Distribution Agent if the
Sponsor effects such sales, or the Distribution Agent if the Sponsor does not,
will, unless prevented by unusual and unforeseen circumstances, such as, among
other reasons, a suspension in trading of a Security, the close of a stock
exchange, outbreak of hostilities and collapse of the economy, sell on each
business day during the 10 business day period at least a number of shares of
each Security which then remains in the Portfolio equal to the number of such
shares in the Portfolio at the beginning of such day multiplied by a fraction
the numerator of which is one and the denominator of which is the number of days
remaining in the 10 business day sales period. The proceeds of sale will not be
distributed by the Distribution Agent until the settlement of the trade upon the
sale of the last Security during the 10 business day period.
Depending on the amount of proceeds to be invested in Units of the New
Series and the number of other orders for Units in the New Series, the Sponsor
may purchase a large amount of securities for the New Series in a short period
of time. The Sponsor's buying of securities may tend to raise the market prices
of these Securities. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the 10
business day period following the Termination Date; depending on the number of
sales required, the prices of, and demand for Securities, such sales may tend to
depress the market prices and thus reduce the proceeds to be credited to Unit
Holders. The Sponsor believes that the sale of underlying Securities over a 10
business day period as described above is in the best interest of Unit Holders
and may
B-8
<PAGE>
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 1
AUTHORIZATION FOR REINVESTMENT
I hereby elect to participate in the Reinvestment Program and do authorize
United States Trust Company of New York, Trustee, to immediately invest all
distributions during the life of the Trust into Units of the Trust.
The foregoing authorization is subject in all respects to the terms and
conditions of participation set forth in the National Equity Trust Low Five
Portfolio Series 1 prospectus and shall remain in effect until such time as I
notify United States Trust Company of New York to the contrary in writing.
..............................................................
Soc. Sec./Tax I.D. No.:
..............................................................
Exact registration as it appears on your Units:
..............................................................
..............................................................
Street address:
..............................................................
City, State, Zip Code
..............................................................
Unit Holder Signature(s): Date:
(all joint holders must sign)
..............................................................
Reinvestment Address: US Trust Company
Attn: Dividend Reinvestment -- Dept. A
P.O. Box 834
New York, N.Y. 10003
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
mitigate the negative market price consequences stemming from the trading of
large amounts of Securities. The Sponsor, in implementing such sales of
Securities on behalf of the Distribution Agent, will seek to maximize the sales
proceeds and will act in the best interest of the Unit Holder. The proceeds of
the sale of the Securities will be in an amount equal to amounts realized upon
the sale of the Securities over the 10 business day period. There can be no
assurance, however, that any adverse price consequences of heavy trading will be
mitigated.
It should also be noted that Unit Holders will realize taxable capital
gains or losses on the liquidation of the Securities representing their Units,
but, due to the procedures for investing in the New Series, no cash would be
distributed at that time to pay any taxes.
The Sponsor may for any reason, in its sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Unit Holder. If the Sponsor so decides, the Sponsor will notify
the Trustee of that decision, and the Trustee will notify the Unit Holders
before the Termination Date. All Unit Holders will then elect either option 1 or
option 2.
By electing to reinvest in the New Series, the Unit Holder indicates his
interest in having his terminating distribution from the Trust invested only in
the New Series created next following termination of the Trust; the Sponsor
expects, however, that a similar reinvestment program will be offered with
respect to all subsequent series of the Trust, thus giving Unit Holders a yearly
opportunity to elect to 'rollover' their terminating distributions into a New
Series. The availability of the reinvestment privilege does not constitute a
solicitation of offers to purchase units of a New Series or any other security.
A Unit Holder's election to participate in the reinvestment program will be
treated as an indication of interest only. The Sponsor intends to coordinate the
date of deposit of a future series so that the terminating trust will terminate
contemporaneously with the creation of a New Series.
The Sponsor reserves the right to modify, suspend or terminate the
reinvestment privilege at any time.
EXPENSES AND CHARGES
INITIAL EXPENSES
All expenses and charges incurred prior to or in the establishment of a
Trust including the cost of the initial preparation, printing and execution of
the Indenture, initial legal and auditing expenses, the cost of the preparation
and printing of this Prospectus and all other advertising and selling expenses,
have been, or will be, paid by the Sponsor or the Underwriters, if any.
FEES
The Sponsor's fee (the 'Supervisory Fee'), earned for portfolio supervisory
services, is based upon the largest number of Units outstanding during the life
of the Trust. The Supervision Fee is as set forth in Part A, 'Summary of
Essential Information' and may exceed the actual costs of providing portfolio
supervisory services for this Trust, but at no time will the total amount the
Sponsor receives for portfolio supervisory services rendered to all series of
the National Equity Trust in any calendar year exceed the aggregate cost to it
of supplying such services in such year. The Supervisory Fee will be paid to the
Sponsor by the Trust. (See 'Sponsor--Responsibility.') For its service as
Trustee under the Indenture, the Trustee receives an annual fee in the amount
set forth under Part A--'Summary of Essential Information.' The Trustee's fee
accrues monthly and is payable quarterly on or before each Distribution Date
from the Income Account, to the extent funds are available and thereafter from
the Principal Account. Such Trustee's fee may be increased without approval of
the Unit Holders in proportion to increases under the classification 'All
Services Less Rent' in the Consumer Price Index published by the United States
Department of Labor but such fee will not be increased in excess of increases in
the Trustee's costs. The Trustee also receives benefits to the extent that it
holds funds on deposit in various non-interest bearing accounts created under
the Indenture.
OTHER CHARGES
The following additional charges are or may be incurred by the Trust as
more fully described in the Indenture: (a) fees of the Trustee for extraordinary
services, (b) expenses of the Trustee (including legal and auditing expenses)
and of counsel designated by the Sponsor, (c) various governmental charges, (d)
expenses and costs of any action taken by the Trustee to protect the Trust and
the rights and interests of the Unit Holders, (e) indemnification of the Trustee
for any losses, liabilities or expenses incurred by it in the administration of
the Trust without negligence, bad faith, willful misfeasance or willful
misconduct on its part or reckless disregard of its obligations and duties, (f)
indemnification of the Sponsor for any losses, liabilities and expenses incurred
in acting as Sponsor or Depositor under the Indenture without gross negligence,
bad faith, willful misfeasance or willful misconduct or reckless disregard of
its obligations and duties, (g) expenditures incurred in contacting Unit Holders
upon termination of the Trust and (h) to the extent then lawful, expenses
(including legal, auditing and printing expenses) of maintaining registration or
qualification of the Units and/or the Trust under Federal or State securities
laws so long as the Sponsor is maintaining a market for the Units.
B-9
<PAGE>
The fees and expenses set forth herein are payable out of the Trust and
when paid by or owing to the Trustee are secured by a lien on the property of
the Trust. If the balance in the Income and Principal Accounts are insufficient
to provide for amounts payable by the Trust, the Trustee has the power to sell
Securities to pay such amounts. To the extent Securities are sold, the size of
such Trust will be reduced and the proportions of the various Securities in the
Trust may change. Such sales might be required at a time such as to result in
lower prices than might otherwise be realized. Moreover, due to the minimum
proceeds of sale of a Security the proceeds of such sales may exceed the amount
necessary for the payment of such fees and expenses.
RIGHTS OF UNIT HOLDERS
OWNERSHIP OF UNITS
Unit Holders are required to hold their Units in uncertificated form. The
Trustee will credit a Unit Holder's account with the number of Units held by the
Unit Holder. Units are transferable only on the records of the Trustee upon
presentation of evidence satisfactory to the Trustee for each transfer and any
sums payable for taxes or other governmental charges imposed upon these
transactions and compliance with the formalities necessary to redeem Units.
CERTAIN LIMITATIONS
The death or incapacity of any Unit Holder will not operate to terminate
the Trust nor entitle the legal representatives or heirs of such Unit Holder to
claim an accounting or to take any other action or proceeding in any court for a
partition or winding up of the Trust.
No Unit Holder shall have the right to vote except with respect to removal
of the Trustee or amendment and termination of the Trust as prescribed in the
Indenture (see 'Administration of the Trust--Amendment' and 'Administration of
the Trust-- Termination'). Unit Holders shall have no right to control the
operation or administration of the Trust in any manner.
DISTRIBUTIONS
Cash amounts received by the Trust will be distributed as set forth below
on a pro rata basis to Unit Holders of record as of the preceding Record Date.
All distributions will be net of applicable expenses and funds required for the
redemption of Units. (See 'Summary of Essential Information,' 'Expenses and
Charges' and 'Rights of Unit Holders--Redemption.') Because the expenses of the
Trust may exceed the dividend income received by the Trust there can be no
assurance that there will be any amounts available for distribution to Unit
Holders. See 'Expenses and Charges--Other Charges.'
The Trustee will credit to the Income Account all cash dividends received
by and payable to the Trust. Other cash receipts will be credited to the
Principal Account. The pro rata share of the Income Account and the pro rata
share of cash in the Principal Account represented by each Unit will be computed
by the Trustee as of the Record Date. (See 'Summary of Essential Information' in
Part A.) Proceeds received from the disposition of any of the Securities not
used to redeem Units or pay Trust expenses will be distributed on the fifth
business day following the receipt of such proceeds to Unit Holders of record on
the business day following the receipt of such proceeds by the Trustee. The
distribution to Unit Holders as of each Record Date will be made on the
following Distribution Date or shortly thereafter (approximately 15 days after
the Record Date) and shall consist of an amount equal to such Unit Holders' pro
rata share of the income credited to the Income Account after deducting
estimated expenses (the 'Income Distribution'). Persons who purchase Units
between a Record Date and a Distribution Date will receive their first
distribution on the second Distribution Date following their purchase of Units.
No distribution need be made from the Principal Account if the balance therein
is less than an amount sufficient to distribute $1.00 per 1,000 Units. Funds
which are available for future distributions, payments of expenses and
redemptions are in accounts which are non-interest bearing to Unit Holders and
are available for use by United States Trust Company of New York, pursuant to
normal banking procedures.
As of each Distribution Date the Trustee will deduct from the Income
Account and, to the extent funds are not sufficient therein, from the Principal
Account, amounts necessary to pay the expenses of the Trust. (See 'Expenses and
Charges.') The Trustee may also withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any governmental charges
payable out of the Trust. Amounts so withdrawn shall not be considered a part of
a Trust's assets for purposes of determining the amount of distributions until
such time as the Trustee shall return all or any part of such amounts to the
appropriate account. In addition, the Trustee may withdraw from the Income
Account and the Principal Account such amounts as may be necessary to cover
redemption of Units by the Trustee. (See 'Rights of Unit Holders--Redemption.')
It is anticipated that the deferred sales charge will reduce the Principal
Account and that amounts in the Principal Account will be sufficient to cover
the cost of the deferred sales charge. Distributions of amounts necessary to pay
the deferred portion of the sales charge will be made to an account maintained
by the Trustee for purposes of satisfying Unit Holders' deferred sales charge
obligations. Although the Sponsor has the right to collect the deferred sales
charge monthly, in order to keep Unit Holders as fully
B-10
<PAGE>
invested as possible, it is anticipated that no Securities will be sold to pay
the deferred sales charge to the Sponsor until after the Termination Date set
forth on page A-7.
The Trustee will follow a policy that it will place securities acquisition
or disposition transactions with a broker or dealer only if it expects to obtain
the most favorable prices and executions of orders. Transactions in securities
held in the Trust are generally made in brokerage transactions (as distinguished
from principal transactions) and the Sponsor may act as broker therein and
receive commissions thereon if the Trustee expects thereby to obtain the most
favorable prices and execution. The furnishing of statistical and research
information to the Trustee by any of the securities dealers through which
transactions are executed will not be considered in placing securities
transactions.
REPORTS AND RECORDS
With each distribution, the Trustee will furnish to the Unit Holders a
statement of the amount of dividends and other receipts, if any, distributed,
expressed in each case as a dollar amount per Unit.
Within a reasonable time after the end of each calendar year, the Trustee
will furnish to each person who was a Unit Holder of record at any time during
the calendar year a statement setting forth: (1) as to the Income Account:
dividends and other cash amounts received, deductions for payment of applicable
taxes and for fees and expenses of the Trust, redemptions of Units, and the
balance remaining after such distributions and deductions, expressed both as a
total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; (2) as to
the Principal Account: the dates of disposition and identity of any Securities
and the net proceeds received therefrom, deductions for payments of applicable
taxes, for fees and expenses of the Trust, for portions of the Deferred Sales
Charge and redemptions of Units, and the balance remaining after such
distributions and deductions, expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each Unit outstanding on the
last business day of such calendar year; (3) a list of the Securities held and
the number of Units outstanding on the last business day of such calendar year;
(4) the Redemption Price per Unit based upon the last computation thereof made
during such calendar year; and (5) amounts actually distributed during such
calendar year from the Income Account and from the Principal Account, separately
stated, expressed both as total dollar amounts and as dollar amounts
representing the pro rata share of each Unit outstanding on the last business
day of such calendar year. The accounts of the Trust may be audited not less
frequently than annually by independent certified public accountants designated
by the Sponsor, and the report of such accountants will be furnished by the
Trustee to Unit Holders upon request.
The Trustee shall keep available for inspection by Unit Holders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of Unit
Holders, a current list of Securities in the Portfolio and a copy of the
Indenture.
REDEMPTION
Tender of Units
Units may be tendered to the Trustee for redemption at its unit investment
trust office at 770 Broadway, New York, New York 10003, upon delivery of a
request for redemption and payment of any relevant tax. No redemption fee will
be charged by the Sponsor or the Trustee. Units redeemed by the Trustee will be
cancelled.
Unit Holders must have their signature guaranteed by an officer of a
national bank or trust company or by a member firm of either the New York,
Midwest or Pacific Stock Exchanges. In certain instances the Trustee may require
additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or certificates
of corporate authority.
Within seven calendar days following such tender, or if the seventh
calendar day is not a business day, on the first business day prior thereto, a
Unit Holder (including the Sponsor) will be entitled to receive in kind an
amount for each Unit tendered equal to the Redemption Price per Unit computed as
of the Evaluation Time set forth in the 'Summary of Essential Information' in
Part A on the date of tender (see 'Redemption--Computation of Redemption Price
per Unit'). The 'date of tender' is deemed to be the date on which Units are
received by the Trustee, except that as regards Units received after the
Evaluation Time, the date of tender is the next day on which the New York Stock
Exchange is open from trading, and such Units will be deemed to have been
tendered to the Trustee on such day for redemption at the Redemption Price
computed on that day.
The Trustee will redeem Units in kind. A Unit Holder will be able (except
during a period described below), not later than the seventh calendar day
following such tender (or if the seventh calendar day is not a business day on
the first business day prior thereto), to receive in kind an amount per Unit
equal to the Redemption Price per Unit as determined as of the day of tender. In
kind distributions (the 'In Kind Distribution') will take the form of whole
shares of Securities. Cash will be distributed in lieu of fractional shares and
will be distributed in cash. The cash and the whole shares will aggregate an
amount equal to the Redemption Price per Unit.
B-11
<PAGE>
Distributions in kind on redemption of Units shall be held by United States
Trust Company of New York, as the Distribution Agent, whom each Unit Holder
shall be deemed to have designated as his agent upon purchase of a Unit, for the
account, and for disposition in accordance with the instructions of, the
tendering Unit Holder as follows:
(a) The Distribution Agent shall sell the In Kind Distribution as of
the close of business on the date of tender or as soon thereafter as
possible and remit to the Unit Holder not later than seven calendar days
thereafter the net proceeds of sale, after deducting brokerage commissions
and transfer taxes, if any, on the sale unless the tendering Unit Holder
requests a distribution of the Securities as set forth in paragraph (b)
below. The Distribution Agent may sell the Securities through the Sponsor,
and the Sponsor may charge brokerage commissions on those sales. Since
these proceeds will be net of brokerage commissions, Unit Holders who wish
to receive cash for their Units should always offer them for sale to the
Sponsor in the secondary market before seeking redemption by the Trustee.
The Trustee may offer Units tendered to it for redemption and cash
liquidation to the Sponsor on behalf of any Unit Holder, to obtain this
more favorable price for the Unit Holder.
(b) If the tendering Unit Holder requests distribution in kind and
tenders Units with a value in excess of $250,000, the Trustee shall sell
any portion of the In Kind Distribution represented by fractional interests
in shares in accordance with the foregoing and distribute the net cash
proceeds plus any other distributable cash to the tendering Unit Holder
together with certificates representing whole shares of each of the
Securities comprising the In Kind Distribution. (In a case in which the
Unit Holder requests a distribution in kind, the Trustee may, in lieu of
distributing Securities in kind to the Unit Holder, offer the Sponsor the
opportunity to acquire the tendered Units in exchange for the number of
shares of each Security and cash which the Unit Holder is otherwise
entitled to receive from the Trust. The federal income tax consequences to
the Unit Holder would be identical in either case.)
Any amounts paid on redemption representing income received will be
withdrawn from the Income Account to the extent funds are available. In
addition, in implementing the redemption procedures described above, the Trustee
and the Distribution Agent shall make any adjustments necessary to reflect
differences between the Redemption Price of the Units and the value of the In
Kind Distribution in whole shares as of the date of tender. To the extent that
Units are redeemed, the size of the Trust will be reduced.
The right of redemption may be suspended and payment of the Redemption
Price per Unit postponed for more than seven calendar days following a tender of
Units for redemption for any period during which the New York Stock Exchange is
closed, other than for weekend and holiday closing, or trading on that Exchange
is restricted or during which (as determined by the Securities and Exchange
Commission) an emergency exists as a result of which disposal or evaluation of
the Securities is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. Neither the Trustee nor
the Sponsor is liable to any person or in any way for any loss or damage that
may result from any such suspension or postponement.
PURCHASE BY THE SPONSOR OF UNITS TENDERED FOR REDEMPTION
The Indenture requires that the Trustee notify the Sponsor of any tender of
Units for redemption. So long as the Sponsor is maintaining a secondary market
for Units, the Sponsor, prior to the close of business on the day of tender, may
purchase any Units tendered to the Trustee for redemption by making payment
therefor to the Unit Holder in an amount not less than the Redemption Price and
not later than the day on which the Units would otherwise have been redeemed by
the Trustee, i.e., the Unit Holder will receive the Redemption Price from the
Sponsor within 7 days of the date of tender (see 'Public Offering of
Units--Secondary Market'). Units held by the Sponsor may be tendered to the
Trustee for redemption as any other Units. The offering price of any Units
resold by the Sponsor will be the Public Offering Price determined in the manner
provided in this Prospectus (see 'Public Offering of Units--Public Offering
Price'). Any profit resulting from the resale of such Units will belong to the
Sponsor, which likewise will bear any loss resulting from a reduction in the
offering or redemption price subsequent to its acquisition of such Units (see
'Public Offering of Units--Profit of Sponsor').
COMPUTATION OF REDEMPTION PRICE PER UNIT
The Redemption Price per Unit of the Trust is determined by the Trustee as
of the Evaluation Time on the date any such determination is made. The
Redemption Price per Unit is each Unit's pro rata share, determined by the
Trustee of: (1) the aggregate value of the Securities in the Trust, (2) cash on
hand in the Trust including dividends receivable on stocks trading ex-dividend
as of the date of computation and (3) any other assets of the Trust, less (a)
amounts representing taxes or governmental charges payable out of a Trust, (b)
the accrued but unpaid expenses of the Trust and accrued Deferred Sales Charges
declared but not yet paid, and (c) cash held for distribution to Unit Holders of
record as of a date prior to the evaluation.
B-12
<PAGE>
The aggregate value of the Securities is determined in good faith by the
Trustee in the following manner: the evaluation is generally based on the
closing trade prices as of the Evaluation Time on the New York Stock Exchange
(unless the Trustee deems these prices inappropriate as a basis for valuation)
or, if there is no closing trade price on that exchange, at the mean between the
closing bid and asked prices. If the Securities are not so listed or, if so
listed and the principal market therefor is other than on that exchange, the
evaluation shall generally be based on the current bid price on the
over-the-counter market (unless the Trustee deems these prices inappropriate as
a basis for evaluation). If current bid or closing prices are unavailable, the
evaluation is generally determined (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Securities on the bid
side of the market or by such other appraisal deemed appropriate by the Trustee,
(c) on the basis of the last trade price of the Security or (d) by any
combination of the above, each as of the Evaluation Time.
SPONSOR
Prudential Securities Incorporated ('Prudential Securities') is a Delaware
corporation and is engaged in the underwriting, securities and commodities
brokerage business and is a member of the New York Stock Exchange, Inc., other
major securities exchanges and commodity exchanges and the National Association
of Securities Dealers, Inc. Prudential Securities, a wholly-owned subsidiary of
Prudential Securities Group Inc. and an indirect wholly-owned subsidiary of The
Prudential Insurance Company of America, is engaged in the investment advisory
business. Prudential Securities has acted as principal underwriter and managing
underwriter of other investment companies. In addition to participating as a
member of various selling groups or as an agent of other investment companies,
Prudential Securities executes orders on behalf of investment companies for the
purchase and sale of securities of such companies and sells securities to such
companies in its capacity as a broker or dealer in securities.
Prudential Securities is distributor for Prudential Government Securities
Trust (Intermediate Term Series), The Target Portfolio Trust, and for Class B
shares of Prudential Adjustable Rate Securities Fund, Inc., and for Class B and
C shares of The Blackrock Government Income Trust, Global Utility Fund, Inc.,
Nicholas-Applegate Fund, Inc. (Nicholas-Applegate Growth Equity Fund),
Prudential Allocation Fund, Prudential California Municipal Fund (California
Income Series and California Series), Prudential Equity Fund, Inc., Prudential
Equity Income Fund, Prudential FlexiFund, Prudential Global Fund, Inc.,
Prudential Global Genesis Fund, Inc., Prudential Global Natural Resources Fund,
Inc., Prudential GNMA Fund, Inc., Prudential Government Income Fund, Prudential
Growth Opportunity Fund, Inc., Prudential High Yield Fund, Inc., Prudential
IncomeVertible(Registered) Plus Fund, Inc., Prudential Intermediate Global
Income Fund, Inc., Prudential MultiSector Fund, Inc., Prudential Municipal Bond
Fund, Prudential Municipal Series Fund, (except Connecticut Money Market Series,
Massachusetts Money Market Series, New York Money Market Series and New Jersey
Money Market Series), Prudential National Municipals Fund, Inc., Prudential
Pacific Growth Fund, Inc., Prudential Short-Term Global Income Fund, Prudential
Strategist Fund, Inc., Prudential Structured Maturity Fund, Inc., Prudential
U.S. Government Fund and Prudential Utility Fund, Inc.
On October 21, 1993, Prudential Securities entered into an omnibus
settlement with the Securities and Exchange Commission (the 'SEC'), state
securities regulators (with the exception of the Texas Securities Commissioner
who joined the settlement on January 18, 1994) and the National Association of
Securities Dealers, Inc. (the 'NASD') to resolve allegations that from 1980
through 1990 Prudential Securities sold certain limited partnership interests in
violation of securities laws to persons for whom such securities were not
suitable and misrepresented the safety, potential returns and liquidity of these
investments. Without admitting or denying the allegations asserted against it,
Prudential Securities consented to the entry of an SEC Administrative Order
which stated that Prudential Securities conduct violated the federal securities
laws, directed Prudential Securities to cease and desist from violating the
federal securities laws, pay civil penalties, and adopt certain remedial
measures to address the violations.
Pursuant to the terms of the SEC settlement, Prudential Securities agreed
to the imposition of $10,000,000 civil penalty, established a settlement fund in
the amount of $300,000,000 and procedures to resolve legitimate claims for
compensatory damages by purchasers of the partnership interests. Prudential
Securities settlement with the state securities regulators included an agreement
to pay a penalty of $500,000 per jurisdiction. Prudential Securities consented
to a censure and to the payment of a $5,000,000 fine in settling the NASD
action.
In October 1994, a criminal complaint was filed with the United States
Magistrate for the Southern District of New York alleging that Prudential
Securities committed fraud in connection with the sale of certain limited
partnership interests in violation of federal securities laws. An agreement was
simultaneously filed to defer prosecution of these charges for a period of three
years from the signing of the agreement, provided that Prudential Securities
complies with the terms of the agreement. If, upon completion of the three year
period, Prudential Securities has complied with the terms of the agreement, no
prosecution will be instituted by the United States for the offenses charged in
the complaint. If on the other hand, during the course of the three year period,
Prudential Securities violates the terms of the agreement, the U.S. Attorney can
then elect to pursue these charges. Under the terms of the agreement, Prudential
Securities agreed, among other things, to pay an additional $300,000,000 into
the fund established by the SEC to pay restitution to investors who purchased
certain Prudential Securities limited partnership interests.
B-13
<PAGE>
LIMITATIONS ON LIABILITY
The Sponsor is liable for the performance of its obligations arising from
its responsibilities under the Indenture, but will be under no liability to Unit
Holders for taking any action or refraining from taking any action in good faith
or for errors in judgment or be liable or responsible in any way for any
default, failure or defect in any Security or for depreciation or loss incurred
by reason of the sale of any Securities, except in cases of willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations and duties
(see 'Sponsor--Responsibility').
RESPONSIBILITY
The Trust is not a managed registered investment company. Securities will
not be sold by the Trustee to take advantage of ordinary market fluctuations.
Although the Sponsor and Trustee do not presently intend to dispose of
Securities, the Indenture permits the Sponsor to direct the Trustee to dispose
of any Security upon the happening of certain events, including, without
limitation, default under certain documents or other occurrences, including
legal actions which might adversely affect future declaration and payment of
dividends, institution of certain legal proceedings, and a decline in market
price to such an extent, or such other adverse market or credit factor, as in
the opinion of the Sponsor would make retention of a Security detrimental to the
Trust and to the interests of the Unit Holders or if required to pay the
Deferred Sales Charge. The Sponsor may instruct the Trustee to tender a Security
for cash or sell the Security on the open market when in its opinion it is in
the best interest of the Unit Holders to do so in the event of a public tender
offer or merger or acquisition announcement.
The Sponsor and/or an affiliate thereof intend to continuously monitor
developments affecting the Securities in the Trust in order to determine whether
the Trustee should be directed to dispose of any such Securities.
It is the responsibility of the Sponsor to instruct the Trustee to reject
any offer made by an issuer of any of the Securities to issue new securities in
exchange and substitution for any Security pursuant to a recapitalization or
reorganization, except that the Sponsor may instruct the Trustee to accept such
an offer or to take any other action with respect thereto as the Sponsor may
deem proper if the issuer failed to declare or pay or the Sponsor anticipates
such issuer will fail to pay or declare anticipated dividends with respect
thereto. If the Trust receives the securities of another issuer as the result of
a merger or reorganization of, or a spin-off, or split-up by the issuer of a
Security included in the original Portfolio, the Trust may under certain
circumstances hold those securities as if they were one of the Securities
initially deposited and adjust the proportionate relationship accordingly for
all future subsequent deposits.
Any securities so received in exchange or substitution will be held by the
Trustee subject to the terms and conditions of the Indenture to the same extent
as Securities originally deposited thereunder. Within five days after the
deposit of securities in exchange or substitution for any of the underlying
Securities, the Trustee is required to give notice thereof to each Unit Holder,
identifying the Securities eliminated and the Securities substituted therefor.
Except as otherwise set forth in the Prospectus, the acquisition by the Trust of
any securities other than the Securities initially deposited is prohibited.
The proceeds resulting from the disposition of any Security in the Trust
will be distributed as set forth under 'Rights of Unit Holders--Distributions'
to the extent such proceeds are not utilized for the purpose of redeeming Units
or paying Trust expenses.
RESIGNATION
If at any time the Sponsor shall resign under the Indenture or shall fail
to perform or be incapable of performing its duties thereunder or shall become
bankrupt or its affairs are taken over by public authorities, the Indenture
directs the Trustee to either (1) appoint a successor Sponsor or Sponsors at
rates of compensation deemed reasonable by the Trustee not exceeding amounts
prescribed by the Securities and Exchange Commission, (2) act as Sponsor itself
without terminating the Trust or (3) terminate the Trust. The Trustee will
promptly notify Unit Holders of any such action.
TRUSTEE
The Trustee is United States Trust Company of New York, with its principal
place of business at 114 West 47th Street, New York, New York 10036 and a unit
investment trust office at 770 Broadway, New York, New York 10003. United States
Trust Company has, since its establishment in 1853, engaged primarily in the
management of trust and agency accounts for individuals and corporations. The
Trustee is a member of the New York Clearing House Association and is subject to
supervision and examination by the Superintendent of Banks of the State of New
York, the Federal Deposit Insurance Corporation and the Board of Governors of
the Federal Reserve System. In connection with the storage and handling of
certain Securities deposited in the Trust,
B-14
<PAGE>
the Trustee may use the services of The Depository Trust Company. These services
may include safekeeping of the Securities and coupon-clipping, computer
book-entry transfer and institutional delivery services. The Depository Trust
Company is a limited purpose trust company organized under the Banking Law of
the State of New York, a member of the Federal Reserve System and a clearing
agency registered under the Securities Exchange Act of 1934.
LIMITATIONS ON LIABILITY
The Trustee shall not be liable or responsible in any way for depreciation
or loss incurred by reason of the disposition of any moneys, Securities or in
respect of any evaluation or for any action taken in good faith reliance on
prima facie properly executed documents except in cases of willful misfeasance,
bad faith, negligence or reckless disregard of its obligations and duties. In
addition, the Indenture provides that the Trustee shall not be personally liable
for any taxes or other governmental charges imposed upon or in respect of the
Trust which the Trustee may be required to pay under current or future laws of
the United States or any other taxing authority having jurisdiction.
RESPONSIBILITY
The Trustee shall not be liable for any default, failure or defect in any
Security or for any depreciation or loss by reason of any such sale of
Securities or by reason of the failure of the Sponsor to give directions to the
Trustee.
Additionally, the Trustee may sell Securities designated by the Sponsor, or
if not so directed, in its own discretion, for the purpose of redeeming Units
tendered for redemption.
Amounts received by the Trust upon the sale of any Security under the
conditions set forth above will be deposited in the Principal Account when
received and to the extent not used for the redemption of Units will be
distributable by the Trustee to Unit Holders of record on the Record Date next
prior to a Distribution Date.
For information relating to the responsibilities of the Trustee under the
Indenture, reference is also made to the material set forth under 'Rights of
Unit Holders' and 'Sponsor--Resignation.'
RESIGNATION
By executing an instrument in writing and filing the same with the Sponsor,
the Trustee and any successor may resign. In such an event the Sponsor is
obligated to appoint a successor trustee as soon as possible. If the Trustee
becomes incapable of acting or becomes bankrupt or its affairs are taken over by
public authorities, the Sponsor may remove the Trustee and appoint a successor
as provided in the Indenture. The Sponsor may also remove the Trustee if it
determines (i) that a material deterioration in the creditworthiness of the
Trustee or (ii) one or more negligent acts on the part of the Trustee having a
materially adverse effect has occurred such that replacement of the Trustee is
in the best interest of the Unit Holders. Such resignation or removal shall
become effective upon the acceptance of appointment by the successor trustee. If
upon resignation of a trustee no successor has been appointed and has accepted
the appointment within thirty days after notification, the retiring trustee may
apply to a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of a trustee becomes effective only when the
successor trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor trustee. A successor trustee has the same
rights and duties as the original trustee except to the extent, if any, that the
Indenture is modified as permitted by its terms.
AMENDMENT AND TERMINATION OF THE INDENTURE
AMENDMENT
The Indenture may be amended by the Trustee and the Sponsor without the
consent of Unit Holders (a) to cure any ambiguity or to correct or supplement
any provision thereof which may be defective or inconsistent, (b) to change any
provision thereof as may be required by the Securities and Exchange Commission
or any successor governmental agency, and (c) to make such other provisions as
shall not adversely affect the interest of the Unit Holders; provided that the
Indenture may also be amended by the Sponsor and the Trustee (or the performance
of any of the provisions of the Indenture may be waived) with the consent of
Unit Holders evidencing 51% of the Units at the time outstanding for the
purposes of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of modifying in any manner the rights
of Unit Holders. In no event shall the Indenture be amended so as to increase
the number of Units issuable thereunder except as the result of the additional
deposits of Securities, to permit the deposit of Securities after the Date of
Deposit except in accordance with the terms and conditions of the Indenture as
initially adopted, to permit any other acquisition of securities or other
property by the Trustee either in addition to or in substitution for any of the
Securities on hand in the Trust or to permit the Trustee to vary the investment
of the Unit Holders or to empower the Trustee to engage in business or to engage
in investment activities not specifically authorized in the Indenture as
originally adopted; or so as to adversely affect the characterization of the
Trust as a grantor trust for Federal
B-15
<PAGE>
income tax purposes. In the event of any amendment requiring the consent of Unit
Holders, the Trustee is obligated to promptly notify all Unit Holders of the
substance of such amendment.
TERMINATION
The Trust may be terminated at any time by the consent of the holders of
51% of the Units or by the Trustee upon the direction of the Sponsor when the
aggregate net value of all Trust assets is less than 40% of the Securities
deposited in the Trust on the Date of Deposit and subsequent thereto. However,
in no event may the Trust continue beyond the Termination Date set forth under
'Summary of Essential Information' in Part A. In the event of termination,
written notice thereof will be sent by the Trustee to all Unit Holders.
LEGAL OPINIONS
Certain legal matters in connection with the Units offered hereby have been
passed upon by Messrs. Cahill Gordon & Reindel, a partnership including a
professional corporation, 80 Pine Street, New York, New York 10005, as special
counsel for the Sponsor.
INDEPENDENT AUDITORS
The financial statements included in this Prospectus have been audited by
Deloitte & Touche LLP, certified public accountants, as stated in their report
appearing herein, and are included in reliance upon such report given upon the
authority of that firm as experts in accounting and auditing.
B-16
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS WITH RESPECT TO THIS INVESTMENT COMPANY NOT CONTAINED IN THIS
PROSPECTUS; AND ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, SECURITIES IN ANY STATE TO
ANY PERSON TO WHOM IT IS NOT LAWFUL TO MAKE SUCH OFFER IN SUCH STATE.
- --------------------------------------------------------------------------------
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 1
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors...................................... A-2
Summary of Essential Information.................. A-7
Fee Table......................................... A-8
Independent Auditors' Report...................... A-9
Statement of Financial Condition.................. A-10
Schedule of Portfolio Securities.................. A-11
The Trust......................................... B-1
Portfolio Summary............................... B-2
Tax Status of the Trust........................... B-3
Retirement Plans.................................. B-4
Public Offering of Units.......................... B-4
Public Offering Price........................... B-4
Public Distribution............................. B-4
Secondary Market................................ B-5
Profit of Sponsor............................... B-5
Volume Discount................................. B-5
Employee Discount............................... B-6
Exchange Option................................... B-6
Federal Income Tax Consequences................. B-7
Reinvestment Program.............................. B-7
Termination Options............................... B-8
Expenses and Charges.............................. B-9
Initial Expenses................................ B-9
Fees............................................ B-9
Other Charges................................... B-9
Rights of Unit Holders............................ B-10
Ownership of Units.............................. B-10
Certain Limitations............................. B-10
Distributions................................... B-10
Reports and Records............................. B-11
Redemption...................................... B-11
Purchase by the Sponsor of Units Tendered for
Redemption.................................... B-12
Computation of Redemption Price Per unit........ B-12
Sponsor........................................... B-13
Limitations on Liability........................ B-14
Responsibility.................................. B-14
Resignation..................................... B-14
Trustee........................................... B-14
Limitations on Liability........................ B-15
Responsibility.................................. B-15
Resignation..................................... B-15
Amendment and Termination of the Indenture........ B-15
Amendment....................................... B-15
Termination..................................... B-16
Legal Opinions.................................... B-16
Independent Auditors.............................. B-16
</TABLE>
------------------------------------------------------
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 1
LOGO
------------------------------------------------------
SPONSOR
-------
PRUDENTIAL SECURITIES INCORPORATED
ONE SEAPORT PLAZA
199 WATER STREET
NEW YORK, NEW YORK 10292
TRUSTEE
-------
UNITED STATES TRUST COMPANY OF NEW YORK
114 WEST 47TH STREET
NEW YORK, NEW YORK 10036
- --------------------------------------------------------------------------------
<PAGE>
PART II.
ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
CONTENTS OF REGISTRATION STATEMENT
ITEM A-BONDING ARRANGEMENTS
The employees of Prudential Securities Incorporated are covered under
Broker's Blanket Policies, Standard Form No. 14 in the aggregate amount of
$62,500,000.
ITEM B-CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The cross-reference sheet.
The Prospectus.
Signatures.
Written consents of the following persons:
Cahill Gordon & Reindel (included in Exhibit 5).
Deloitte & Touche LLP.**
The following Exhibits:
<TABLE>
<S> <C> <C>
***Ex- 3.(i) -- Certificate of Incorporation of Prudential Securities Incorporated dated March
29, 1993.
***Ex- 3.(ii) -- Revised By-Laws of Prudential Securities Incorporated as amended through March
5, 1993.
*Ex- 4.a -- Trust Indenture and Agreement dated April 25, 1995.
*Ex- 4.b -- Reference Trust Agreement dated April 25, 1995.
*Ex- 5 -- Opinion of counsel as to the legality of the securities being registered.
****Ex-24 -- Powers of Attorney executed by a majority of the Board of Directors of
Prudential Securities Incorporated.
+Ex-27.1 -- Financial Data Schedule.
**Ex-99.1 -- Information as to Officers and Directors of Prudential Securities Incorporated
is incorporated by reference to Schedules A and D of Form BD filed by Prudential
Securities Incorporated, pursuant to Rules 15b1-1 and 15b3-1 under the
Securities Exchange Act of 1934 (1934 Act File No. 8-16267).
**Ex-99.2 -- Affiliations of Sponsor with other investment companies.
**Ex-99.3 -- Broker's Blanket Policies, Standard Form No. 14 in the aggregate amount of
$62,500,000.
*Ex-99.4 -- Distribution Agency Agreement among Prudential Securities Incorporated, as
Depositor, United States Trust Company of New York, as Trustee, and United
States Trust Company of New York, as Distribution Agent.
</TABLE>
- ------------------
* Filed herewith.
** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of Prudential Unit Trusts,
Insured Tax-Exempt Series 1, Registration No. 2-89263.
*** Incorporated by reference to exhibit of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of Government Securities Equity
Trust Series 5, Registration No. 33-57992.
**** Incorporated by reference to exhibits of same designation filed with the
Securities and Exchange Commission as an exhibit to the Registration
Statement under the Securities Act of 1933 of National Municipal Trust
Series 172, Registration No. 33-54681.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant,
National Equity Trust, Low Five Portfolio Series 1, has duly caused this
Registration Statement or amendment thereto to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of New York, and State of New
York on the 25th day of April, 1995.
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 1
(Registrant)
By PRUDENTIAL SECURITIES INCORPORATED
(Depositor)
By: /s/ KENNETH SWANKIE
---------------------------------------------
Kenneth Swankie
Senior Vice President
Manager-Unit Investment Trust Department
By the following persons,* who constitute a majority of the
Board of Directors of Prudential Securities Incorporated
Alan D. Hogan
George A. Murray
John P. Murray
Leland B. Paton
Vincent T. Pica
Richard A. Redeker
Hardwick Simmons
Lee B. Spencer, Jr.
By: /s/ KENNETH SWANKIE
---------------------------------------------
Kenneth Swankie
Senior Vice President
Manager-Unit Investment Trust Department,
As Authorized Signatory for Prudential Securities
Incorporated and Attorney-in-Fact for the persons
listed above
- ------------------
* Pursuant to Powers of Attorney previously filed.
II-2
<PAGE>
CONSENT OF COUNSEL
The consent of Cahill Gordon & Reindel to the use of its name in the
Prospectus included in this Registration Statement is contained in its opinion
filed as Exhibit 5 to this Registration Statement.
II-3
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated April 25, 1995, accompanying the
financial statements of the National Equity Trust, Low Five Portfolio Series 1,
included herein and to the reference to our Firm as experts under the heading
'Auditors' in the prospectus which is a part of this registration statement.
DELOITTE & TOUCHE LLP
April 25, 1995
New York, New York
II-4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
EXHIBITS
TO
AMENDMENT NO. 4
TO
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT
OF 1933 OF SECURITIES OF UNIT INVESTMENT
TRUSTS REGISTERED ON FORM N-8B-2
------------------------
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 1
------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT INDEX PAGE NO.
- --------------- ---------------------------------------------------------------------------------------- ---------
<S> <C> <C> <C>
***Ex- 3.(i) -- Certificate of Incorporation of Prudential Securities Incorporated dated March 29,
1993.
***Ex- 3.(ii) -- Revised By-Laws of Prudential Securities Incorporated as amended through March 5,
1993.
*Ex- 4.a -- Trust Indenture and Agreement dated April 25, 1995.
*Ex- 4.b -- Reference Trust Agreement dated April 25, 1995.
*Ex- 5 -- Opinion of counsel as to the legality of the securities being registered.
****Ex-24 -- Powers of Attorney executed by a majority of the Board of Directors of Prudential
Securities Incorporated.
*Ex-27.1 -- Financial Data Schedule.
**Ex-99.1 -- Information as to Officers and Directors of Prudential Securities Incorporated is
incorporated by reference to Schedules A and D of Form BD filed by Prudential
Securities Incorporated, pursuant to Rules 15b1-1 and 15b3-1 under the Securities
Exchange Act of 1934 (1934 Act File No. 8-16267).
**Ex-99.2 -- Affiliations of Sponsor with other investment companies.
**Ex-99.3 -- Broker's Blanket Policies, Standard Form No. 14 in the aggregate amount of
$62,500,000.
*Ex-99.4 -- Distribution Agency Agreement among Prudential Securities Incorporated, as
Depositor, United States Trust Company of New York, as Trustee, and as
Distribution Agent.
</TABLE>
- ------------------
<TABLE>
<S> <C>
* Filed herewith.
** Incorporated by reference to exhibit of same designation filed with the Securities and Exchange Commission
as an exhibit to the Registration Statement under the Securities Act of 1933 of Prudential Unit Trusts,
Insured Tax-Exempt Series 1, Registration No. 2-89263.
*** Incorporated by reference to exhibit of same designation filed with the Securities and Exchange Commission
as an exhibit to the Registration Statement under the Securities Act of 1933 of Government Securities
Equity Trust Series 5, Registration No. 33-57992.
**** Incorporated by reference to exhibits of same designation filed with the Securities and Exchange Commission
as an exhibit to the Registration Statement under the Securities Act of 1933 of National Municipal Trust
Series 172, Registration No. 33-54681.
</TABLE>
<PAGE>
_______________________________________________________________
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES
and for all other series formed on or subsequent to the
effective date specified below to which this Trust Indenture
and Agreement is applicable
____________________
TRUST INDENTURE AND AGREEMENT
Among
PRUDENTIAL SECURITIES INCORPORATED
As Depositor
UNITED STATES TRUST COMPANY
OF NEW YORK
As Trustee
____________________
Dated: April 25, 1995
<PAGE>
TRUST INDENTURE AND AGREEMENT
National Equity Trust
TABLE OF CONTENTS
Page
Article and Section
PREAMBLES.............................................. 1
ARTICLE I -- DEFINITIONS............................... 2
Section 1.01. Definitions........................ 2
ARTICLE II -- DEPOSIT OF SECURITIES; ACCEPTANCE OF
TRUST............................................. 5
Section 2.01. Deposit of Securities.............. 6
Section 2.02. Acceptance of Trust................ 6
Section 2.03. Issue of Units..................... 7
Section 2.04. Uncertificated Units............... 7
Section 2.05. Deposit of Additional Securities... 9
Section 2.06. Register of Units..................
ARTICLE III -- ADMINISTRATION OF TRUST................. 10
Section 3.01. Initial Cost....................... 10
Section 3.02. Income Account..................... 10
Section 3.03. Principal Account.................. 10
Section 3.04. Reserve Account.................... 10
Section 3.05. Distribution....................... 10
Section 3.06. Distribution Statements............ 13
Section 3.07. Replacement Securities............. 15
Section 3.08. Sale of Securities................. 16
Section 3.09. Notice and Sale by Trustee......... 17
Section 3.10. Refunding Securities............... 17
Section 3.11. Notice of Actions.................. 18
Section 3.12. Extraordinary Distributions........ 18
Section 3.13. Extraordinary Event - Security
Retention and Voting............ 19
Section 3.14. Deferred Sales Charge.............. 19
ARTICLE IV -- EVALUATION OF SECURITIES................. 20
Section 4.01. Evaluation of Securities........... 20
Section 4.02. Tax Reports........................ 21
Section 4.03. Liability of the Trustee........... 21
-i-
<PAGE>
ARTICLE V -- TRUST EVALUATION, REDEMPTION, TRANSFER OF
UNITS............................................. 21
Section 5.01. Trust Evaluation................... 21
Section 5.02. Redemptions by Trustee; Purchases
by Depositor.................... 23
Section 5.03. Redemption Upon Termination........ 25
Section 5.04. Transfer of Units.................. 26
ARTICLE VI -- TRUSTEE.................................. 27
Section 6.01. General Definition of Trustee's
Liabilities, Rights and Duties.. 27
Section 6.02. Books, Records and Reports......... 31
Section 6.03. Indenture and List of Securities on
File............................ 32
Section 6.04. Compensation of Trustee............ 32
Section 6.05. Removal and Resignation of Trustee;
Successor....................... 34
Section 6.06. Qualification of Trustee........... 36
Section 6.07. Trustee's Response to Inquiries.... 36
Section 6.08. Waiver of Liens.................... 36
ARTICLE VII -- RIGHTS OF UNIT HOLDERS.................. 36
Section 7.01. Beneficiaries of Trust............. 36
Section 7.02. Rights, Terms and Conditions....... 36
ARTICLE VIII -- DEPOSITOR.............................. 37
Section 8.01. Liabilities; Power of Attorney..... 37
Section 8.02. Discharge.......................... 38
Section 8.03. Successors......................... 39
Section 8.04. Resignation........................ 40
Section 8.05. Additional Depositors.............. 40
Section 8.06. Exclusions from Liability.......... 41
Section 8.07. Compensation....................... 42
ARTICLE IX -- ADDITIONAL COVENANTS; MISCELLANEOUS
PROVISIONS........................................ 42
Section 9.01. Amendments without the Consent of
Unit Holders.................... 42
Section 9.02. Notice of Amendment................ 43
Section 9.03. Termination........................ 43
Section 9.04. Construction....................... 45
Section 9.05. Written Notice..................... 45
Section 9.06. Severability....................... 45
-ii-
<PAGE>
Section 9.07. Dissolution of Depositor Not to
Terminate....................... 46
Section 9.08. Name............................... 46
EXECUTION.............................................. 46
ACKNOWLEDGMENTS........................................ 46
SECURITIES INITIALLY DEPOSITED......................... 46
____________________
This Table of Contents does not constitute part of the
Indenture.
-iii-
<PAGE>
TRUST INDENTURE AND AGREEMENT dated April 25, 1995,
among PRUDENTIAL SECURITIES INCORPORATED, as Depositor and
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee.
WITNESSETH that:
WHEREAS, the Depositor and the Trustee are entering
into this Trust Indenture and Agreement for the purpose of
establishing certain of the terms, covenants and conditions of
the National Equity Trust series and each subsequent Series
which may be established from time to time hereafter,
incorporating by reference the terms hereof; and
WHEREAS, for the National Equity Trust Low Five
Portfolio Series 1, and each subsequent Series of the National
Equity Trust, to which this Trust Indenture and Agreement is
applicable, the Depositor and the Trustee shall execute a
separate Reference Trust Agreement incorporating by reference
this Trust Indenture and Agreement and effecting any amendment,
supplement or variation from or to such incorporation by
reference with respect to the related series, and specifying
for that series: (i) the Securities deposited in trust and the
number of Units delivered by the Trustee in exchange for the
Securities pursuant to Section 2.03; (ii) the initial
fractional undivided interest represented by each Unit in each
Trust; (iii) the first Settlement Date; (iv) the first
Computation Day; (v) the first and subsequent Distribution
Date(s); (vi) the first and subsequent Record Date(s);
(vii) the name of the Depositor; (viii) the Termination Date
and (ix) any other change or addition contemplated or permitted
by this Trust Indenture and Agreement; and
WHEREAS, the Depositor will acquire and, concurrently
with the execution and delivery of the appropriate Reference
Trust Agreement, will deposit in trust with the Trustee the
Securities to be listed in the Schedule thereto, all to be held
by the Trustee in trust upon the terms and conditions
hereinafter set forth as amended, supplemented or varied by
such Reference Trust Agreement, for the use and benefit of all
registered holders of units of fractional undivided interest in
the Trust to which such Reference Trust Agreement relates; and
WHEREAS, concurrently with the receipt of the
aforesaid deposit, the Trustee will record on its books the
ownership by the Depositor thereof of units of fractional
undivided interest in such Securities and in the Income Account
and the Principal Account maintained under this Indenture in
the manner hereinafter provided (which units of fractional
undivided interest so recorded respectively will represent in
the aggregate 100% of the beneficial interest established hereby in such
<PAGE>
Securities, Income Account and Principal
Account) and if the Sponsor so directs, will execute in the
name of the Depositor thereof a certificate or certificates
representing the aggregate number of Units specified in such
Reference Trust Agreement and deliver same to such Depositor.
NOW, THEREFORE, in consideration of the premises and
of the mutual agreements herein contained, the Depositor and
the Trustee agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions: Whenever used in this
Indenture, the following words and phrases, unless the context
clearly indicates otherwise, shall have the following meanings:
(1) "Additional Securities" shall mean such
Securities (as defined herein) as are listed in
Supplementary Schedules of the Reference Trust Agreement
and which have been deposited to effect an increase over
the number of Units initially specified in Part II of the
Reference Trust Agreement.
(2) "Additional Units" shall mean such Units (as
defined herein) as are issued in respect of Additional
Securities.
(3) "Basic Agreement" shall mean this Trust
Indenture and Agreement dated as indicated on the cover
page hereof as originally executed, or if amended as
hereinafter provided, as so amended, exclusive of the
terms contained in any related Reference Trust Agreement.
(4) "Business Day" shall mean any day other than a
Saturday or Sunday or other day on which the New York
Stock Exchange is closed for trading, a legal holiday in
the City of New York, or a day on which banking
institutions are authorized by law to close.
(5) "Computation Day" shall have the meaning
assigned to it in Part II of the Reference Trust
Agreement.
<PAGE>
(6) "Contract Securities" shall mean Securities
which are to be acquired by the Trust pursuant to
contracts, including (i) Securities listed in the Schedule
to the Reference Trust Agreement and (ii) Securities which
the Depositor has contracted to purchase for the Trust
pursuant to Sections 2.05 and 3.07.
(7) "Deferred Sales Charge" shall mean any deferred
sales charge payable in accordance with the provisions of
Section 3.12 hereof, as set forth in the prospectus for a
Trust.
(8) "Depositor" of the Trust shall have the meaning
assigned to it in Part II of the Reference Trust
Agreement.
(9) "Distribution Agency Agreement" shall mean the
Distribution Agency Agreement dated the date of this
Indenture among the Trustee, the Depositor and the
Distribution Agent.
(10) "Distribution Agent" shall mean the Distribution
Agent appointed in the Distribution Agency Agreement, or
its successor as appointed pursuant to the Distribution
Agency Agreement.
(11) "Distribution Date" shall have the meaning
assigned to it in Part II of the Reference Trust
Agreement.
(12) "Evaluation Time" shall mean the close of
trading on the New York Stock Exchange, presently
4:00 p.m. or such other time as is designated as the
Evaluation Time in the prospectus for a Trust.
(13) "Indenture" shall mean the Basic Agreement, as
further amended, supplemented or varied by the Reference
Trust Agreement.
(14) "Prospectus" shall mean the prospectus relating
to a Trust in the form first used to confirm sales of
Units of such Trust.
(15) "Record Date" shall have the meaning assigned to
it in Part II of the Reference Trust Agreement.
<PAGE>
(16) "Reference Trust Agreement" shall mean a
supplement to the Basic Agreement, the purpose of which
shall be to amend, supplement and/or vary certain of the
terms contained in the Basic Agreement. The Reference
Trust Agreement, together with the Basic Agreement to the
extent that such Reference Trust Agreement incorporates it
by reference, defines all the terms, rights and duties
relevant to the series of National Equity Trust series, to
which such Reference Trust Agreement relates.
(17) "Replacement Security" shall mean a Security
purchased by the Trustee pursuant to Section 3.07 hereof.
(18) "Securities" shall mean such common stock and
other securities (including for all purposes hereof "when-
issued" and/or "regular way" contracts, if any, for the
purchase thereof evidenced by the purchasing broker's
confirmation of, or list of its confirmations of, such
contracts and a certified check or checks and/or an
irrevocable letter or letters of credit in the amount
required for such purchase) as are (i) deposited in
irrevocable trust and listed in the Schedule or
Supplementary Schedules to the Reference Trust Agreement
and (ii) received in exchange or substitution for any
Securities pursuant to Section 3.07 hereof or pursuant to
Section 3.13 hereof, as may from time to time be acquired
and continue to be held as a part of the Trust to which
such Reference Trust Agreement relates.
(19) "Special Security" shall have the meaning
assigned to it in Section 3.07 hereof.
(20) "Termination Date" shall mean the date set forth
in Part II of the Reference Trust Agreement.
(21) "Trust" shall mean the trust created by this
Indenture in conjunction with a Reference Trust Agreement,
which shall be denominated as indicated in Part II of the
Reference Trust Agreement relating to such Trust, and
which shall consist of the Securities held pursuant and
subject to this Indenture together with all dividends
thereon, received but undistributed, any undistributed
cash realized from the sale, redemption or liquidation
thereof, such amounts as may be on deposit in the Reserve
Account hereinafter established and all other property and
rights to which Unit Holders may be entitled under the
provisions of this Indenture.
<PAGE>
(22) "Trustee" shall mean United States Trust Company
of New York, or any successor trustee as hereinafter
provided for.
(23) "Unit" shall mean the fractional undivided
interest in and ownership for the Trust which shall be
initially equal to the fraction specified for the Trust in
Part II of the Reference Trust Agreement, the denominator
of which fraction shall be decreased by the number of any
such Units redeemed as provided in Sections 5.02 and 5.03
and increased by the number of any Additional Units as
provided in Section 2.06 or revised as provided in
Section 2.03.
(24) "Unit Holder" shall mean the registered holder
of any Unit as recorded on the registration books of the
Trustee, his legal representatives and heirs and the
successors of any corporation, partnership or other legal
entity which is a registered holder of any Unit and as
such shall be deemed a beneficiary of the Trust created by
this Indenture to the extent of his pro rata share
thereof.
(25) The words "herein," "hereby," "herewith,"
"hereof," "hereinafter," "hereunder," "hereinabove,"
"hereafter," "heretofore" and similar words or phrases of
reference and association shall refer to this Indenture in
its entirety.
(26) Words importing the singular number shall
include the plural number in each case and vice versa and
words importing persons shall include corporations and
associations, as well as natural persons.
ARTICLE II
DEPOSIT OF SECURITIES; ACCEPTANCE OF TRUST
Section 2.01. Deposit of Securities: The Depositor,
concurrently with the execution and delivery of the applicable
Reference Trust Agreement, has deposited with the Trustee in
trust the Securities listed in the Schedule or Schedules
attached to the Reference Trust Agreement in bearer form or
duly endorsed in blank or accompanied by all necessary
instruments of assignment and transfer in proper form to be
held,
<PAGE>
administered and applied by the Trustee as herein
provided and/or cash (or a letter of credit in lieu of cash)
with written instructions to the Trustee to purchase one or
more of such Securities which cash (or cash in an amount equal
to the face amount of the letter of credit), to the extent not
used by the Trustee to purchase such Securities within the
90-day period following the first deposit of Securities in the
Trust, shall be distributed to Unit Holders on the Distribution
Date next following such 90-day period or such earlier date as
the Depositor and the Trustee determine. In the event that the
purchase of Securities represented by "when-issued" and/or
"regular way" contracts shall not be consummated in accordance
with said contracts, the Trustee shall credit to the Principal
Account pursuant to Section 3.03 hereof the cash or cash
equivalents (including such portion of any letter of credit
applicable to such contracts) deposited by the Depositor for
the purpose of such purchase. Such monies, unless invested in
substitute Securities in accordance with Section 3.07 hereof,
shall be distributed to Unit Holders pursuant to Section 3.05
hereof on the second Distribution Date following the failure of
consummation of such purchase or such earlier date as the
Depositor and the Trustee determine. The Depositor shall
deliver the Securities listed on said Schedule or Schedules to
the Trustee which were not actually delivered concurrently with
the execution and delivery of the Reference Trust Agreement
within 90 days after said execution and delivery or, if
Section 3.07 applies, within such shorter period as is
specified in Section 3.07.
The Trustee is irrevocably authorized hereby to
effect registration of transfer of the Securities in fully
registered form in the name of the Trustee or its nominee.
Section 2.02. Acceptance of Trust: The Trustee
hereby accepts the Trust created by this Indenture for the use
and benefit of the Unit Holders in the Trust, subject to the
terms and conditions of this Indenture.
Section 2.03. Issue of Units: By executing the
Reference Trust Agreement and receipt for deposited property,
the Trustee will thereby acknowledge receipt of the deposit
relating to the Trust to which such Reference Trust Agreement
relates, referred to in Section 2.01, and simultaneously with
the receipt of said deposit, will record on its books for the
account of the Depositor the aggregate number of Units of the
Trust in exchange therefor as specified in Part II of the
Reference Trust Agreement. The number of Units may be
increased through a split of the Units or decreased through a
reverse
<PAGE>
split thereof, as directed by the Depositor, on any day
on which the Depositor is the only Unit Holder, which revised
number of Units shall be recorded by Trustee on its books.
The Trusts created by this Indenture are separate and
distinct trusts for all purposes and the assets of one such
trust may not be commingled with the assets of any other, nor
shall the expenses of any such trust be charged against the
other. The Units representing the ownership of a fractional
undivided interest in one Trust shall not be exchangeable for
Units representing the ownership of an undivided fractional
interest in any other except as set forth in the applicable
Prospectus.
Section 2.04. Uncertificated Units: All Units shall
be held in uncertificated form, unless and as the Trustee may
deem it appropriate to issue certificates or if so directed by
the Depositor. The Trustee may deem and treat the person in
whose name any Unit is registered upon the books of the Trustee
as the owner thereof for all purposes and the Trustee shall not
be affected by any notice to the contrary.
Section 2.05. Deposit of Additional Securities:
From time to time and in the discretion of the Depositor, the
Depositor may make deposits of Additional Securities duly
endorsed in blank or accompanied by all necessary instruments
of assignment and transfer in proper form (or contracts to
purchase Additional Securities and cash or an irrevocable
letter of credit in an amount necessary to consummate the
purchase of any Additional Securities pursuant to such
contracts ("Additional Contract Securities")) and/or cash (or a
letter of credit in lieu of cash) with instructions to the
Trustee to purchase one or more additional Securities (which
cash (or cash in an amount equal to the face amount of the
letter of credit), to the extent not used by the Trustee to
purchase such Additional Securities within the 90-day period
following the first deposit of Securities in the Trust, shall
be distributed to Unit Holders on the Distribution Date next
following such 90-day period or such earlier date as the
Depositor and the Trustee determine) and Cash (as defined
below), if Cash is an asset of the Trust immediately prior to
the supplemental deposit, provided that each deposit during the
90-day period following the first deposit of Securities in the
Trust shall replicate, to the extent practicable as hereinafter
provided, the Securities (including Contract Securities) and
shall exactly replicate Cash (other than Cash to be distributed
solely to persons other than persons receiving the distribution
<PAGE>
as holders of Additional Units created by the deposit) held in
the Trust immediately prior to each such deposit; and, provided
further that each deposit of Additional Securities and Cash, if
any, subsequent to such 90-day period shall exactly replicate
the Securities (including Contract Securities) and Cash (other
than Cash to be distributed solely to persons other than
persons receiving the distribution as holders of additional
Units created by the deposit) held in the Trust immediately
prior to each such deposit. For purposes of this paragraph,
Cash means cash on hand in the Trust and/or cash receivable by
the Trust as of the date of the supplemental deposit reduced by
payables and accrued expenses.
Accordingly, for a deposit subsequent to the 90-day
period following the first deposit of Securities:
1. Any Additional Securities included in a deposit
shall be identical to Securities held in the Trust immediately
prior to the deposit and in amounts such that (i) the number of
shares of Additional Securities of a particular issue included
in a deposit divided by (ii) the aggregate of the number of
shares of all Additional Securities included in the deposit
results in a fraction which is the same as the fraction
resulting from division of (iii) the aggregate number of shares
of the Securities of the same issue held in the Trust
immediately prior to the deposit divided by (iv) the aggregate
number of shares of all Securities held in the Trust
immediately prior to the deposit;
2. Any deposit of Additional Securities shall be
accompanied by Cash in an amount bearing the same ratio to the
aggregate number of shares of all Additional Securities in the
deposit as the Cash held in the Trust immediately prior to the
deposit bears to the aggregate number of shares of all
Securities held in the Trust immediately prior to the deposit,
exclusive of Cash held in the Trust and designated for
distribution solely to persons other than persons receiving the
distribution as holders of Additional Units created by the
deposit; and for deposit during the 90-day period following the
first deposit of Securities in the Trust, the rules stated in
subparagraphs (1) and (2) of this paragraph shall apply except
that any Additional Securities (including Additional Contract
Securities) need be only substantially similar (rather than
identical to) Securities held in the Trust immediately prior to
the deposit and need meet the proportionality requirements
only to the extent practicable. Without limiting the
generality of the phrase "to the extent practicable", if the
Depositor specifies
<PAGE>
a minimum number of shares of a Security
with respect to a particular trust to be included in a deposit
and such minimum requirement cannot be met or if a Security
identical to a Security held in the Trust is not readily
obtainable, substitution of other substantially similar
Securities (including Securities of an issue originally
deposited) in order to meet the foregoing proportionality
requirements shall be considered as a meeting of such
requirements "to the extent practicable". Each deposit of
Additional Securities shall be listed in a Supplementary
Schedule to the Reference Trust Agreement stating the date of
such deposit and the number of Additional Units being issued
therefor. The Trustee shall acknowledge in such Supplementary
Schedule receipt of the deposit, and simultaneously with the
receipt of said deposit, reflect the aggregate number of
Additional Units specified in such Supplementary Schedule by
recording such Additional Units on its books. Such Additional
Securities shall be held, administered and applied by the
Trustee in the same manner as herein provided for the
Securities. The execution by the Depositor in connection with
the deposit of Additional Securities of a Supplementary
Schedule to the Reference Trust Agreement shall constitute the
approval by the Depositor as satisfactory in form and substance
of the contracts to be entered into or assumed by the Trustee
with regard to any Additional Securities listed on such
Supplementary Schedule and authorization to the Trustee on
behalf of the Trust to enter into or assume such contracts and
otherwise to carry out the terms and provisions thereof or to
take other appropriate action in order to complete the deposit
of the Additional Securities covered thereby into the Trust.
The parties hereto agree that a Supplementary Schedule to the
Reference Trust Agreement may be delivered by telecopier and
that such delivery shall have the same force and effect as the
delivery of an original executed document.
Section 2.06. Register of Units: A register shall
be kept by the Trustee containing the names and addresses of
the Unit Holders and the number of Units owned by each Unit
Holder, and in which all issues, exchanges, transfers and
cancellations of Units shall be recorded.
<PAGE>
ARTICLE III
ADMINISTRATION OF TRUST
Section 3.01. Initial Cost: With respect to the
Trust, the cost of the initial preparation, printing and
execution of this Indenture, shall be paid by the Depositor,
provided, however, that the liability on the part of the
Depositor for such initial costs, fees and expenses shall not
include any fees, costs or other expenses incurred in
connection herewith after the execution of this Indenture, and
the deposit relating to the Trust, referred to in Section 2.01.
Section 3.02. Income Account: The Trustee shall
collect the dividends or other like cash distributions on the
Securities in the Trust as such are paid, and credit such
amounts, as collected, to a separate account to be known as the
"Income Account."
Section 3.03. Principal Account: The Securities in
the Trust and all cash, other than amounts credited to the
Income Account, received by the Trustee in respect of the
Securities in the Trust shall be credited to a separate account
for the Trust to be known as the "Principal Account."
Section 3.04. Reserve Account: From time to time
the Trustee shall withdraw from the cash on deposit in the
Principal Account such amounts as it, in its sole discretion,
shall deem requisite to establish a reserve for any applicable
taxes or other governmental charges that may be payable out of
the Trust. Such amounts so withdrawn shall be credited to a
separate account which shall be known as the "Reserve Account."
The Trustee shall not be required to distribute to the Unit
Holders any of the amounts in the Reserve Account; provided,
however, that if the Trustee shall, in its sole discretion,
determine that such amounts are no longer necessary for payment
of any applicable taxes or other governmental charges, then it
shall promptly deposit such amounts in the account from which
previously withdrawn, or, if such Trust has been terminated or
is in the process of termination, the Trustee shall distribute
to each Unit Holder such holder's interest in the Reserve
Account in accordance with Section 9.04 hereof.
Section 3.05. Distribution: As of each Computation
Day for the Trust, the Trustee shall:
<PAGE>
(a) deduct from the Income Account, or, to the
extent funds are not available in such Account, from the
Principal Account, and pay to itself individually the
amounts that it is at the time entitled to receive
pursuant to Section 6.04 or this Section 3.05;
(b) deduct from the Income Account, or, to the
extent funds are not available in such Account, from the
Principal Account, an amount equal to the unpaid fees and
expenses, if any, including registration charges, Blue Sky
fees, printing costs, attorneys' fees, auditing costs and
other miscellaneous out-of-pocket expenses, as certified
by the Depositor, incurred in keeping the registration of
the Units and the Trust on a current basis, provided,
however, that no portion of such amount shall be deducted
or paid unless the payment thereof from the Trust is at
that time lawful; and
(c) deduct from the Income Account or, to the extent
funds are not available in such account, from the
Principal Account the estimated amount that the Depositor
is entitled to receive pursuant to Section 8.07 and hold
such amount without interest until such time as it is
payable to the Depositor as set forth below. The Trustee
shall distribute to the Depositor from the amount so held
pursuant to the immediately preceding sentence the amounts
that the Depositor is entitled to receive pursuant to
Section 8.07 on account of its services theretofore
performed and expenses theretofore incurred. With respect
to Trusts having monthly, quarterly or semiannual
Distribution Dates, the Trustee shall deduct from the
Income Account one-twelfth, one-quarter or one-half, as
the case may be, of the estimated annual amount that the
Depositor is entitled to receive and shall distribute such
amounts to the Depositor on the monthly, quarterly or
semiannual Distribution Dates, as the case may be. In the
event of the appointment of a successor depositor pursuant
to Section 6.01(f)(1), deduct from the Income Account, or,
to the extent that funds are not available in such
Account, from the Principal Account, and pay to such
successor depositor the amounts, if any, that it is at the
time lawful for it to receive under said
Section 6.01(f)(1).
All amounts (i) permitted to be withdrawn from the
Principal Account under this Indenture in order to satisfy
obligations which, pursuant to the terms hereof, are first to
be paid out of the Income Account to the extent funds are
<PAGE>
available, or (ii) permitted to be withdrawn from the Principal
Account pursuant to Section 5.02 hereof, may be made only from
the balance in the Principal Account after excluding capital
amounts being held for distribution to Unit Holders of record
on the Record Date for a prior Distribution Date pursuant to
the second following paragraph. The Principal Account shall be
reimbursed for any such amounts described in clause (i) of the
preceding sentence when sufficient funds are next available in
the Income Account after giving effect to the payment from the
Income Account of all amounts otherwise required to be deducted
therefrom at that time.
On each Distribution Date or within a reasonable
period of time thereafter, the Trustee shall distribute by mail
to each Unit Holder of record at the close of business on the
preceding Record Date at his address appearing on the
registration books of the Trustee such holder's pro rata share
of the balance of the Income Account, plus such holder's pro
rata share of the distributable cash balance of the Principal
Account, each computed as of the preceding Record Date after
deduction of all amounts specified in paragraphs (a), (b) and
(c) of this Section 3.05; provided, however, that funds
credited to the Principal Account in the event of the failure
of consummation of a contract to purchase Securities pursuant
to Section 2.01 hereof, funds representing the proceeds of the
sale of Securities pursuant to Section 3.08 hereof, and funds
representing the proceeds of the sale of Securities under
Section 5.02, 5.03, 6.04 or this Section 3.05 in excess of the
amounts needed for the purposes of said Sections shall not be
distributed until the second following Distribution Date or at
such earlier date as shall be determined by the Trustee or
directed by the Depositor. The Trustee shall not be required
to make a distribution from the Principal Account unless the
cash balance on deposit therein available for distribution
shall be sufficient to distribute at least $1.00 per 1,000
Units.
The amounts to be so distributed to each Unit Holder
of the Trust of record as of each Record Date shall be that pro
rata share of the cash balance as of such Record Date of the
Income and Principal Accounts of the Trust, as shall be
represented by a notation on the registration or other record
books of the Trustee.
In the computation of each such share, fractions of
less than one cent shall be omitted. After any such distribu-
tion provided for above, any cash balance remaining in the
<PAGE>
Income Account or the Principal Account shall be held in
the same manner as other amounts subsequently deposited in each
of such Accounts, respectively.
For the purposes of distribution as herein provided,
the holders of record on the registration books of the Trustee
at the close of business on each Record Date shall be
conclusively entitled to such distribution, and no liability
shall attach to the Trustee by reason of payment to any such
registered Unit Holder of record. Nothing herein shall be
construed to prevent the payment of amounts from the Income
Account and the Principal Account to individual Unit Holders by
means of one check, draft or other proper instrument, provided
that the appropriate statement of such distribution shall be
furnished therein as provided in Section 3.06 hereof.
On each Deferred Sales Charge payment date set forth
in the prospectus for a Trust, the Trustee shall pay the
account created pursuant to Section 3.14 the amount of the
Deferred Sales Charge payable on each such date as stated in
the prospectus for a Trust. Such amount shall be withdrawn
from the Principal Account from the amounts therein designated
for such purpose or otherwise deducted from such account.
Section 3.06. Distribution Statements: With each
distribution from the Income or Principal Accounts of the
Trust, the Trustee shall furnish Unit Holders a statement of
the amount being distributed from each such account, expressed
in each case as a dollar amount per Unit.
Within a reasonable period of time after the last
Business Day of each calendar year, but not later than
February 28th, the Trustee shall furnish to each person who at
any time during such calendar year was a Unit Holder a
statement setting forth, with respect to such calendar year:
(A) as to the Income Account of the Trust:
(1) the amount of dividends received on the
Securities,
(2) the amounts paid from the Income Account
for redemptions pursuant to Section 5.02,
(3) the deductions from the Income Account for
payment of applicable taxes or other governmental
charges, if any, compensation of the Depositor, fees
<PAGE>
and expenses of the Trustee, transfers to the Reserve
Account, any expenses paid by the Trust pursuant to
Section 3.05 hereof and any Deferred Sales Charge
paid,
(4) the amount distributed from the Income
Account, identifying separately amounts distributed
as dividends and as other income,
(5) any other amount credited to or deducted
from the Income Account, and
(6) the balance remaining after such
distributions and deductions, expressed both as a
total dollar amount and as a dollar amount per Unit
outstanding on the last Business Day of such calendar
year;
(B) as to the Principal Account of the Trust:
(1) the dates of the sale, liquidation or
redemption of any of the Securities, the identity of
such Securities and the net proceeds received
therefrom, excluding any portion thereof credited to
the Income Account,
(2) the amount paid from the Principal Account
for redemption pursuant to Section 5.02,
(3) the deductions for payment of applicable
taxes and other governmental charges, if any, fees
and expenses of the Trustee, transfers to the Reserve
Account, any expenses paid by the Trust under
Section 3.05 hereof and any Deferred Sales Charge
paid,
(4) the amount distributed from the Principal
Account for such period, pursuant to Section 3.05
hereof,
(5) any other amount credited to or deducted
from the Principal Account, and
(6) the balance remaining after such
distributions and deductions, expressed both as a
total dollar amount and as a dollar amount per Unit
outstanding on the last Business Day of such calendar
year; and
<PAGE>
(C) the following information:
(1) a list of the Securities held in the Trust
as of the last Business Day of such calendar year,
(2) the number of Units outstanding on the last
Business Day of such calendar year,
(3) the Unit Value (as defined in Section 5.01)
based on the last evaluation of such Trust made
during such calendar year, and
(4) the amounts actually distributed during
such calendar year from the Income and Principal
Accounts of the Trust, separately stated, expressed
both as total dollar amounts and as dollar amounts
per Unit outstanding on the Record Date for such
distributions.
Section 3.07. Replacement Securities: In the event
that any Contract Security is not delivered due to any
occurrence, act or event beyond the control of the Depositor
and of the Trustee (such a Contract Security being herein
called a "Special Security"), the Depositor may instruct the
Trustee to purchase Replacement Securities which have been
selected by the Depositor having a cost not in excess of the
cost of the Special Securities not so delivered. To be
eligible for inclusion in the Trust, the Replacement Securities
which the Depositor selects must: (i) be of the same type as
that replaced (e.g., both will be common stock or preferred
stock); (ii) in the Depositor's judgment, closely resemble the
Special Security as respects the investment characteristics
which led the Depositor to select the Special Security for
inclusion in the Trust; and (iii) be purchased within twenty
days after delivery of notice of the failed contract to the
Trustee or to the Depositor, whichever occurs first. Any
Replacement Securities received by the Trustee shall be
deposited hereunder and shall be subject to the terms and
conditions of this Indenture to the same extent as other
Securities deposited hereunder. No such deposit of Replacement
Securities shall be made after the earlier of (i) 90 days after
the date of execution and delivery of the applicable Reference
Trust Agreement or (ii) the first Distribution Date to occur
after the date of execution and delivery of the applicable
Reference Trust Agreement.
Whenever a Replacement Security is acquired by the
Depositor pursuant to the provisions of this Section 3.07, the
<PAGE>
Trustee shall, within five days thereafter, mail to all Unit
Holders notices of such acquisition, including an
identification of the Special Security and the Replacement
Security acquired. The purchase price of a Replacement
Security shall be paid out of the funds in the principal
account attributable to the Special Security which it replaces.
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any purchase made
pursuant to any such instructions from the Depositor and in the
absence of such instructions the Trustee shall have no duty to
purchase any Replacement Securities under this Indenture. The
Depositor shall not be liable for any failure to instruct the
Trustee to purchase any Replacement Security or for errors of
judgment in selecting any Replacement Security.
Section 3.08. Sale of Securities: In order to
maintain the sound investment character of the Trust, the
Depositor may direct the Trustee to sell or liquidate
Securities at such price and time and in such manner as shall
be determined by the Depositor, provided that the Depositor has
determined that any one or more of the following conditions
exist:
(a) that there has been a failure by the issuer of
such Securities to declare or pay an anticipated dividend
thereon;
(b) that any action or proceeding has been
instituted in law or equity seeking to restrain or enjoin
the payment of dividends on any such Securities, or that
there exists any other legal question or impediment
affecting such Securities or the payment of dividends on
the same;
(c) that there has occurred any breach of covenant
or warranty in any resolution, ordinance, trust, indenture
or other agreement or document, which would adversely
affect either immediately or contingently the payment of
dividends on such Securities;
(d) that the price of any such Securities has
declined to such an extent, or such other market or credit
factor exists, that in the opinion of the Depositor the
retention of such Securities would be detrimental to the
Trust and to the interest of the Unit Holders;
(e) that there has been a default in the payment of
principal or par or stated value of, premium, if any, or
income on any other outstanding securities of the issuer
<PAGE>
or the guarantor of such securities which might materially
and adversely, either immediately or contingently, affect
the declaration or payment of dividends on the Securities;
and
(f) that the tax treatment of the Trust as a grantor
trust would otherwise be jeopardized.
In order to pay the Deferred Sales Charge, the
Trustee shall sell or liquidate such an amount of Securities
and at such time and from time to time and in such manner as
the Depositor shall direct such that the proceeds of such sale
or liquidation shall equal the amount required to be paid to
the Depositor pursuant to the Deferred Sales Charge program as
set forth in the prospectus for a Trust.
Upon receipt of such direction from the Depositor,
upon which the Trustee shall rely, the Trustee shall proceed to
sell the specified Securities in accordance with such
direction. The Trustee shall not be liable or responsible in
any way for depreciation or loss incurred by reason of any sale
made pursuant to any such direction or by reason of the failure
of the Depositor to give any such direction, and in the absence
of such direction the Trustee shall have no duty to sell any
Securities under this Section 3.08. The Depositor shall not be
liable for errors of judgment in directing or failing to direct
the Trustee pursuant to this Section 3.08.
Section 3.09. Notice and Sale by Trustee: If at any
time there has been a failure by the issuer of any of the
Securities to pay a dividend that is due and payable, the
Trustee shall notify the Depositor thereof. If within thirty
days after such notification the Trustee has not received any
instruction from the Depositor to sell or to hold or to take
any other action in connection with such Security, the Trustee
shall sell such Security forthwith, and the Trustee shall not
be liable or responsible in any way for depreciation or loss
incurred by reason of such sale or by reason of any action or
inaction in accordance with such written instructions of the
Depositor. The Trustee shall promptly notify the Depositor of
such action in writing and shall set forth therein the Security
sold and the proceeds received therefrom.
Section 3.10. Refunding Securities: Except as
otherwise provided in Section 3.13, in the event that an offer
by the issuer of any of the Securities or any other party shall
be made to issue new Securities, the Trustee shall reject such
<PAGE>
offer. However, should any exchange or substitution be
effected notwithstanding such rejection or without an initial
offer, any Securities, cash and/or property received in
exchange shall be deposited hereunder and shall be promptly
sold, if securities or property, by the Trustee. The cash then
remaining shall be distributed to Unit Holders on the next
Distribution Date in the manner set forth in Section 3.05
regarding distributions from the Principal Account.
Section 3.11. Notice of Actions: Except as
otherwise provided in Section 3.13, in the event that the
Trustee shall have been notified at any time of any action to
be taken or proposed to be taken by holders of any Securities
held by the Trust (including, but not limited to, the making of
any demand, direction, request, giving of any notice, consent
or waiver or the voting with respect to election of directors
or any amendment or supplement to any corporate resolution,
agreement or other instrument under or pursuant to which such
Securities have been issued) the Trustee shall promptly notify
the Depositor and shall thereupon take such action or refrain
from taking any action as the Depositor shall in writing
direct; provided, however, that if the Depositor shall not
within five business days of the giving of such notice to the
Depositor direct the Trustee to take or refrain from taking any
action, the Trustee shall take such action as it, in its sole
discretion, shall deem advisable. Neither the Depositor nor
the Trustee shall be liable to any person for any action or
failure to take action with respect to this section.
Section 3.12. Extraordinary Distributions: Except
as otherwise provided in Section 3.13, any property received by
the Trustee after the initial date of Deposit in a form other
than cash or additional shares of the Securities listed on
Schedule A or of a Replacement Security, shall be either
(i) dealt with under the Distribution Agreement as though such
property were an asset of the Trust other than cash remaining
on hand at the termination of the Trust or (ii) sold, and the
proceeds of sale credited to the Principal Account of the
Trust, all as the Depositor may direct. In no event shall the
Trustee hold as part of the Trust, except temporarily pending
sale or distribution as described in the preceding sentence,
any property other than cash (including a letter of credit) and
the Securities described on Schedule A or a Replacement
Security.
The Securities and cash represented by a Unit shall
be uniform so that each Unit shall at all times represent
<PAGE>
property identical to that represented by every other Unit.
Securities identical to those represented by a Unit and
received as the result of a stock dividend or stock split may
be retained in the Trust and the number of shares of such a
Security represented by a Unit adjusted accordingly. All other
non-cash distributions in respect of any Securities held in the
Trust shall be sold or distributed to Unit Holders through the
Distribution Agent, as referred to above.
Section 3.13. Extraordinary Event - Security
Retention and Voting. In the event the Trustee is notified of
any action to be taken or proposed to be taken by holders of
the securities held by the Trust in connection with any
proposed merger, reorganization, spin-off, split-off or
split-up by the issuer of stock or securities held in the
Trust, the Trustee shall take such action or refrain from
taking any action, as appropriate, so as to insure that the
securities are voted as closely as possible in the same manner
and in the same general proportion as are the securities held
by owners other than the Trust. If stock or securities are
received by the Trustee, with or without cash, as a result of
any merger, reorganization, spin-off, split-off or split-up by
the issuer of stock or securities held in the Trust, the
Trustee at the direction of the Depositor may retain such stock
or securities in the Trust. Neither the Depositor nor the
Trustee shall be liable to any person for any action or failure
to take action with respect to this section.
Section 3.14. Deferred Sales Charge. If the
Reference Trust Agreement and Prospectus for a Trust specifies
a Deferred Sales Charge, the Trustee shall, on the dates
specified in and as permitted by the prospectus, withdraw from
the Income Account if such account is designated in the
prospectus as the source of the payments of the Deferred Sales
Charge, or to the extent funds are not available in that
account or if such account is not so designated, from the
Principal Account, an amount per Unit specified in the
prospectus and credit such amount to a special, non-Trust
account maintained at the Trustee out of which the Deferred
Sales Charge will be distributed to the Depositor. If the
Income Account is not designated as the source of the Deferred
Sales Charge payment or if the balances in the Income and
Principal Accounts are insufficient to make any such
withdrawal, the Trustee, shall, as directed by the Depositor,
either advance funds in an amount equal to the proposed
withdrawal and be entitled to reimbursement of such advance
upon the deposit of additional monies in the Income Account or
the Principal Account, sell Securities and credit
<PAGE>
the proceeds thereof to such special Depositor's account or credit
Securities in kind to such special Depositor's Account. Such
directions shall identify the Securities, if any, to be sold or
distributed in kind and shall contain, if the Trustee is
directed by the Depositor to sell a Security, instructions as
to execution of such sales. If a Unit Holder redeems Units
prior to full payment of the Deferred Sales Charge, the Trustee
shall, if so provided in the Reference Trust Agreement and
Prospectus, on the Redemption Date, withhold from the
Redemption Price payment to such Unit Holder an amount equal to
the unpaid portion of the Deferred Sales Charge as such amount
is certified by the Depositor to the Trustee prior to the
Redemption Date, upon which certification the Trustee shall be
entitled to rely, and distribute such amount to such special
Depositor's account or, if the Depositor shall purchase such
Unit pursuant to the terms of Section 5.02 hereof, the
Depositor shall pay the Redemption Price for such Unit less the
unpaid portion of the Deferred Sales Charge. The Depositor may
at any time instruct the Trustee to distribute to the Depositor
cash or Securities previously credited to the special
Depositor's account.
ARTICLE IV
EVALUATION OF SECURITIES
Section 4.01. Evaluation of Securities: The Trustee
shall determine separately and promptly furnish to the
Depositor upon request the value of each issue of the
Securities in the Trust (determined as set forth below) as of
the Evaluation Time on each of the days on which the Trustee
shall make the Trust Evaluation required by Section 5.01. In
making the evaluations the Trustee shall determine the value of
each issue of the Securities in the Trust by the following
methods: If the Securities are listed on one or more national
securities exchanges, such valuation shall be based on the
closing price on such exchange which is the principal market
thereof, deemed to be the New York Stock Exchange if the
Securities are listed thereon (unless the Trustee deems such
price inappropriate as a basis for valuation). If the
Securities are not so listed, or, if so listed and the
principal market therefor is other than such exchange or there
is no closing price on such exchange, such valuation shall be
based on the closing price in the over-the-counter market
(unless the Trustee deems such price inappropriate as a basis
for valuation) or if there is no such closing price, by any of
the following methods which the
<PAGE>
Trustee deems appropriate: (i) on the basis of current bid
prices of such Securities as obtained from investment dealers
or brokers (including the Depositor) who customarily deal in
securities comparable to those held by the Trust, or (ii) if
bid prices are not available for any of such Securities, on
the basis of bid prices for comparable securities, or (iii)
by appraisal of the value of the Securities on the bid side
of the market or by such other appraisal as is deemed appropriate,
or (iv) by any combination of the above. The Trustee shall also
make an evaluation of the Securities deposited in the Trust as of
the time said Securities are deposited under this Indenture. Such
evaluation shall be made on the same basis as set forth above.
The Trustee's determination of the closing prices of the
Securities on the date of deposit shall be included in the
Schedules attached to the Reference Trust Agreement.
Section 4.02. Tax Reports: For the purpose of
permitting Unit Holders to satisfy any reporting requirements
of applicable Federal or State tax law, the Trustee shall
transmit to any Unit Holder upon written request any
determinations made by the Trustee pursuant to Section 4.01.
Section 4.03. Liability of the Trustee: The
Depositor and Unit Holders may rely on any evaluation furnished
by the Trustee and shall have no responsibility for the
accuracy thereof. The determinations made by the Trustee
hereunder shall be made in good faith upon the basis of the
best information available to it. The Trustee shall be under
no liability to the Depositor or Unit Holders for errors in
judgment, provided, however, that this provision shall not
protect the Trustee against any liability to which it would
otherwise be subject by reason of willful misfeasance, bad
faith or negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties
hereunder. The Trustee shall not be liable or responsible for
depreciation or losses incurred by reason of the purchase, sale
or retention of any Securities.
ARTICLE V
TRUST EVALUATION, REDEMPTION,
TRANSFER OF UNITS
Section 5.01. Trust Evaluation: The Trustee shall
make an evaluation of the Trust as of the Evaluation Time
<PAGE>
(i) on the last Business Day of each of the months of June and
December, (ii) on the day on which any Unit of the Trust is
tendered for redemption (unless tender is made after the
Evaluation Time on such day, in which case tender shall be
deemed to have been made on the next day subsequent thereto on
which the New York Stock Exchange is open for trading), and
(iii) on any other day desired by the Trustee or requested by
the Depositor. Such evaluations shall take into account and
itemize separately (a)(1) the cash on hand in the Trust (other
than monies on deposit in the Reserve Account, funds deposited
on the date hereof by the Depositor for the purchase of
Securities and not theretofore credited to the Principal
Account pursuant to Section 3.03 and funds in the Principal
Account with respect to which contracts for the purchase of the
Replacement Securities have been entered into pursuant to
Section 3.07 hereof), including dividends receivable on stocks
trading ex dividend, (a)(2) the value of each issue of the
Securities in the Trust as determined by the Trustee pursuant
to Section 4.01, and (a)(3) all other assets of the Trust. For
each such evaluation there shall be deducted from the sum of
the above (b)(1) amounts representing any applicable taxes or
other governmental charges payable out of the Trust and for
which no deductions shall have previously been made for the
purpose of addition to the Reserve Account, (b)(2) amounts
representing accrued fees of the Trustee and expenses of the
Trust including but not limited to unpaid fees of the Trustee
and expenses of the Trust (including legal and auditing
expenses), accrued fees and expenses of the Depositor and its
respective successors, if any, and (b)(3) cash held for
distribution to Unit Holders of record as of a date on or prior
to the evaluation then being made. The value of the pro rata
share of each Unit of the Trust determined on the basis of any
such evaluation shall be referred to herein as the "Unit
Value."
The sum of (a)(1) and (a)(3) reduced by the sum of
(b)(1) and (b)(2) and (b)(3) shall be referred to herein as the
"Unit Cash Value."
The Trustee shall promptly advise the Depositor of
each determination of Unit Value made by it as above provided,
and, in addition, upon each evaluation by the Trustee under
Section 4.01 other than those involved in such calculations of
Unit Value, the Trustee shall promptly furnish to the
Depositor, for purposes of assisting it in maintaining a market
in the Units, with such information regarding the Principal,
Income and Reserve Accounts as the Depositor may reasonably
request.
<PAGE>
Section 5.02. Redemptions by Trustee; Purchases by
Depositor: On any Business Day on which any Unit or Units are
tendered for redemption (the "Tender Day") by a Unit Holder or
his duly authorized attorney to the Trustee at its corporate
trust office in the City of New York, such Units shall be
redeemed by the Trustee on that Tender Day. Units in
uncertificated form shall be tendered by means of an
appropriate request for redemption in form approved by the
Trustee. Unit Holders must sign exactly as their name appears
on the register with the signature guaranteed by an officer of
a national bank or trust company, or by a member firm of either
the New York, Midwest, or Pacific Coast Stock Exchanges, or in
such other manner as may be acceptable to the Trustee. The
Trustee may also require additional documents such as, but not
limited to, trust instruments, certificates of death,
appointments as executor or administrator or certificates of
corporate authority. Subject to payment by such Unit Holder of
any tax or other governmental charges which may be imposed
thereon, such redemption is to be made by distribution to the
Distribution Agent on behalf of the redeeming Unit Holder on
the Tender Day and subsequent distribution to such Unit Holder
by the Distribution Agent no later than the next Business Day
following the Tender Day (such next Business Day being
hereinafter the "Redemption Date") of (i) the Holder's pro rata
portion as of the Tender Day of the Securities in the Trust, in
whole shares, as designated by the Sponsor and (ii) cash equal
to the Unit Cash Value multiplied by the number of Units being
redeemed (herein called the "Redemption Distribution"). In
addition, the Trustee shall distribute to the Distribution
Agent no later than the seventh calendar day after Tender Day,
(or if such is not a Business Day, then the first Business Day
prior thereto), for distribution to a redeeming Unit Holder on
such day, cash equal to the value of any fractional shares
included in such Unit Holder's pro rata portion of the
Securities as of the Tender Day.
The Depositor shall maintain with the Trustee a
current list of Securities held in the Trust designated to be
sold for the purpose of satisfying amounts for the payment of
cash equivalent to the value of fractional shares; provided
that if the Depositor shall for any reason fail to maintain
such a list, the Trustee, in its sole discretion, may designate
a current list of Securities for such purposes. The net
proceeds of any sales of Securities from such list shall be
credited to the Principal Account of the Trust and paid
therefrom, to the extent necessary in accordance with this
Section and otherwise distributed pursuant to this Indenture.
The Trustee shall not
<PAGE>
be liable or responsible in any way for
depreciation or loss incurred by reason of any sale or sales
made in accordance with this Section 5.02.
The portion of the Redemption Distribution which
represents the Unit Holder's interest in the Income Account
shall be withdrawn from the Income Account to the extent
available. The balance paid on any redemption, including
dividends receivable on stocks trading ex dividend, if any,
shall be withdrawn from the Principal Account to the extent
that funds are available for such purpose. If such available
balance shall be insufficient, the Trustee shall advance funds
sufficient to pay such amount to the Unit Holder and shall be
entitled to reimbursement of such advance upon the deposit of
additional monies in the Income Account or Principal Account,
whichever happens first. Should any amounts so advanced with
respect to declared but unreceived dividends prove
uncollectable because of default in payment of such dividends,
the Trustee shall have the right immediately to liquidate
Securities in amount sufficient to reimburse itself for such
advances, without interest. In the event that funds are
withdrawn from the Principal Account for payment of any portion
of the Redemption Distribution representing dividends
receivable on stocks trading ex dividend, the Principal Account
shall be reimbursed when sufficient funds are next available in
the Income Account for such funds so applied.
Unit Holders requesting a cash distribution shall
receive such distribution in accordance with { 1.01(b) of the
Distribution Agency Agreement.
The Trustee may in its discretion, and shall when so
directed by the Depositor, suspend the right of redemption or
postpone the date of payment of the Redemption Distribution for
more than seven calendar days following the day on which tender
for redemption is made (1) for any period during which the New
York Stock Exchange is closed other than customary weekend and
holiday closings or during which trading on the New York Stock
Exchange is restricted; (2) for any period during which an
emergency exists as a result of which disposal by the Trust of
the Securities is not reasonably practicable or it is not
reasonably practicable fairly to determine in accordance
herewith the value of the Securities; or (3) for such other
period as the Securities and Exchange Commission may by order
permit. The Trustee shall not be liable to any person or in
any way for any loss or damage which may result from any such
suspension or postponement.
<PAGE>
Not later than the close of business on the day any
Unit is tendered for redemption by a Unit Holder other than the
Depositor, the Trustee shall notify the Depositor of such
tender. The Depositor shall have the right to purchase such
Unit by notifying the Trustee of its election to make such
purchase no later than the close of business on the Tender Day.
such purchase shall be made by payment for such Unit by the
Depositor to the Unit Holder not later than the close of
business on the Redemption Date of an amount not less than the
Redemption Distribution which would otherwise be payable by the
Trustee to such Unit Holder.
Any Unit so purchased by the Depositor may at the
option of the Depositor be tendered to the Trustee for
redemption at the corporate trust office of the Trustee in the
manner provided in the first paragraph of this Section 5.02.
The Trustee shall not be liable or responsible in any
way for depreciation or loss incurred by reason of any sale or
redemption of Securities made pursuant to this Section 5.02.
Section 5.03. Redemption Upon Termination: Should
the Trust terminate on the Termination Date specified in the
Reference Trust Agreement (the "Termination Date"), Securities
will be distributed to the Distribution Agent as agent for the
Unit Holders as provided in Section 9.03(b)(i). A Unit Holder
may notify the Distribution Agent in writing at least 3 days
prior to the Evaluation Time on the Termination Date as to
whether such Unit Holder desires: 1) to receive his pro rata
share of the Securities in-kind; 2) to receive the cash
proceeds from the sale of his pro rata share of underlying
securities; or 3) to participate in the reinvestment program by
investing his interest in the Trust including the proceeds from
the sale of his pro rata share of underlying securities and one
or more of the underlying securities in units of a new trust.
Unit Holders who do not notify the Distribution Agent of their
election will receive cash from the sale of their pro rata
share of underlying securities (Option 2). Unit Holders who
elect Options 2 or 3 will have their securities sold and
distributed or invested pursuant to Section 1.02(b) of the
Distribution Agency Agreement.
A Unit Holder choosing in-kind distribution will
receive such distribution on the first business day following
the Termination Date subject to payment by such Unit Holder of
any tax or governmental charges which may be imposed thereon.
This distribution shall consist of such Unit Holder's pro rata
<PAGE>
portion of each of the Securities in whole shares based on the
number of Units owned as of the Termination Date plus the Unit
Holder's pro rata share of the balances in the Income and
Principal Accounts distributed to the Distribution Agent as
provided in Section 9.03 hereof (herein called the "Termination
Distribution"). In addition, the Distribution agent shall
distribute no later than the seventh calendar day after
Termination Date (or if such is not a Business Day, then the
first Business Day prior thereto), cash equal to the value of
any fractional shares included in such Unit Holder's pro rata
portion of the Securities as of the Termination Date.
The Depositor shall provide the Distribution Agent
with a list of Securities held in the Trust designated to be
sold for the purpose of satisfying amounts for the payment of
cash equal to the value of fractional shares; provided that if
the Depositor shall for any reason fail to provide such a list,
the Distribution Agent, in its sole discretion, may designate a
list of Securities for such purposes. The excess proceeds of
any sales of Securities from such list shall be credited to the
cash account to be distributed pro rata at the time of the
settlement of the last sale pursuant to Section 1.02(b) of the
Distribution Agency Agreement.
Notwithstanding the option to reinvest the proceeds
in the next National Equity Trust Low Five Portfolio Series to
be offered after the Termination Date (the "New Series"), the
Depositor may, in its sole discretion at any time, decide not
to offer any Series of the Trust in the future. If the
Depositor so decides, the Depositor shall notify the Trustee of
that decision, and the Trustee shall notify Unit Holders before
the Termination Date. Moreover, the Trustee may in its
discretion, and shall when so directed by the Depositor in
writing, postpone the Termination Date (1) for any period
during which the New York Stock Exchange, is closed other than
customary weekend and holiday closings; (2) for any period
during which (as determined by the Securities and Exchange
Commission by rule, regulation or order) (i) trading on the New
York Stock Exchange is restricted or (ii) an emergency exists
as a result of which disposal by the Trust of the Securities is
not reasonably practicable or it is not reasonably practicable
fairly to determine in accordance herewith the value of the
Securities for the purposes of any Trust Evaluation; or (3) for
such other periods as the Securities and Exchange Commission
may by order permit.
Section 5.04. Transfer of Units: Units may be
transferred by the registered Unit Holder thereof by
<PAGE>
presentation of transfer instructions, at the principal office
of the Trustee accompanied by such documents executed by the
registered Unit Holder or his authorized attorney as the
Trustee deems necessary to evidence the authority of the person
making such transfer. The Trustee may deem and treat the
person in whose name any Unit shall be registered upon the
books of the Trustee as the owner of such Unit for all purposes
hereunder and the Trustee shall not be affected by any notice
to the contrary. The transfer books maintained by the Trustee
for the purposes of this Section 5.04 shall be closed in
connection with the termination of the Trust pursuant to
Section 9.03 hereof.
A sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any
such transfer shall be paid to the Trustee. A Unit Holder may
be required to pay $2 (or such other amount as may be specified
by the Trustee and approved by the Depositor) on any such
transfer.
The Trustee may also adopt other reasonable rules and
regulations for the transfer, tender and redemption of Units.
ARTICLE VI
TRUSTEE
Section 6.01. General Definition of Trustee's
Liabilities, Rights and Duties: In addition to and
notwithstanding the other duties, rights, privileges and
liabilities of the Trustee as otherwise set forth, the
liabilities of the Trustee are further defined as follows:
(a) all monies deposited with or received by the
Trustee hereunder shall be held by it without interest in
trust as part of the Trust until required to be disbursed
in accordance with the provisions of this Indenture and
such monies will be segregated by separate recordation on
the trust ledger of the Trustee so long as such practice
preserves a valid preference under applicable law, or if
such preference is not so preserved the Trustee shall
handle such monies in such other manner as shall
constitute the segregation and holding thereof in trust
within the meaning of the Investment Company Act of 1940,
as part of the Trustee's compensation the Trustee may
benefit from
<PAGE>
reasonable cash balances in the Income
Account and the Principal Account, as provided in Section
6.04;
(b) the Trustee shall be under no liability for any
action taken in good faith on any appraisal, paper, order,
list, demand, request, consent, affidavit, notice,
opinion, direction, evaluation, endorsement, assignment,
resolution, draft or other document whether or not of the
same kind prima facie properly executed, or for the
disposition of monies, Securities or Units pursuant to
this Indenture, or in respect of any evaluation which it
is required to make or is required or permitted to have
made by others under this Indenture or otherwise, except
by reason of its own wilful misfeasance, bad faith or
negligence in the performance of its duties or by reason
of its reckless disregard of its obligations and duties
hereunder. The parties hereto may construe any of the
provisions of this Indenture, insofar as the same may
appear to be ambiguous or inconsistent with any other
provisions hereof which construction shall be binding upon
the Unit Holders and the parties hereto. The Trustee
shall be under no liability for any construction of any
such provisions hereof;
(c) the Trustee shall not be responsible for or in
respect of the recitals herein, the validity or
sufficiency of this Indenture or for the due execution
hereof by the Depositor or for the form, character,
genuineness, sufficiency, value or validity of any
Securities, and the Trustee shall in no event assume or
incur any liability, duty or obligation to any Unit Holder
or the Depositor other than as expressly provided for
herein. The Trustee shall not be responsible for or in
respect of the validity of any signatures by or on behalf
of the Depositor;
(d) the Trustee shall be under no obligation to
appear in, prosecute or defend any action which in its
opinion may involve it in expense or liability, unless as
often as required by the Trustee, it shall be furnished
with reasonable security and indemnity against such
expense or liability, and any pecuniary cost to the
Trustee from such action shall be deductible from and a
charge against the Income and Principal Accounts of the
Trust. Subject to the foregoing, the Trustee shall in its
discretion undertake such action as it may deem necessary
at any and all times to protect the Trust and the rights
and interest of the Unit Holders pursuant to the terms of
this Indenture, provided, however, that the expenses and
costs
<PAGE>
of such actions, undertakings or proceedings shall
be reimbursable to the Trustee from the Income and
Principal Accounts, and the payment of such costs and
expenses shall be secured by a lien on the Trust prior to
the interests of the Unit Holders;
(e) the Trustee may employ agents, attorneys,
accountants and auditors and shall not be answerable for
the default or misconduct of any such agents, attorneys,
accountants or auditors if such agents, attorneys,
accountants or auditors shall have been selected with
reasonable care; provided, however, that if the Trustee
chooses to employ the Depository Trust Company in
connection with the storage and handling of, and the
furnishing of administrative services in connection with
the Securities, the Trustee will be answerable for any
default or misconduct of the Depository Trust Company and
its employees and agents as fully and to the same extent
as if such default or misconduct had been committed or
occasioned by the Trustee. The Trustee shall be fully
protected in respect of any action under this Indenture
taken, or suffered, in good faith by the Trustee, in
accordance with the opinion of its counsel. The accounts
of the Trust shall be audited not less frequently than
annually by independent certified public accountants
designated from time to time by the Depositor, and the
reports of such accountants shall be furnished by the
Trustee to Unit Holders upon request. The fees and
expenses charged by such agents, attorneys, accountants or
auditors shall constitute an expense of the Trust
reimbursable from the Interest and Principal Accounts as
set forth in Section 6.04 hereof;
(f) if the Depositor shall resign pursuant to
Section 8.04 hereof or shall fail to undertake or perform
any of the duties which by the terms of this Indenture are
required by it to be undertaken or performed or if the
Depositor shall be dissolved or become incapable of acting
or shall be adjudged a bankrupt or insolvent, or a
receiver of the property of the Depositor shall be
appointed or any public officer shall take charge or
control of the Depositor or its property or affairs for
the purpose of rehabilitation, conservation or
liquidation, then in any such case, the Trustee may:
(1) appoint a successor depositor meeting the
qualifications set forth in Section 8.03 who shall act
hereunder in all respects in place of the Depositor which
successor shall be satisfactory to the Trustee, and which
may be compensated at rates
<PAGE>
deemed by the Trustee to be reasonable under the
circumstances, by deduction from the Income Account of the
Trust or, to the extent funds are not available in such
Account, from the Principal Account of the Trust but no
such deduction shall be made exceeding such reasonable
amount as the Securities and Exchange Commission may
prescribe in accordance with Section 26(a)(2)(C) of the
Investment Company Act of 1940, or (2) terminate this
Indenture and the trust created hereby and liquidate the
Trust in the manner provided in Section 9.03 or (3) act as
Depositor itself without terminating the Trust;
(g) If the value of the Trust as shown by any Trust
Evaluation shall be less than 40% of the value of the
Securities in the Trust determined as of the date on which
the most recent deposit of Securities occurred, the
Trustee may in its discretion, and shall if so directed by
the Depositor, terminate this Indenture and the trust
created hereby and liquidate the Trust all in the manner
provided in Section 9.03;
(h) the Trustee is authorized and empowered, at the
request and direction of the Depositor, to execute and
file on behalf of the Trust any and all documents, in
connection with consents to service of process, required
to be filed under the securities laws of the various
States in order to permit the sale of Units of the Trust
in such States by the Depositor;
(i) in no event shall the Trustee be liable for any
taxes or other governmental charges imposed upon or in
respect of the Securities or upon the dividends thereon or
upon it as Trustee hereunder or upon or in respect of the
Trust which it may be required to pay under any present or
future law of the United States of America or of any
other taxing authority having jurisdiction in the
premises. For all such taxes and charges and for any
expenses, including counsel fees, which the Trustee may
sustain or incur with respect to such taxes or charges,
the Trustee shall be reimbursed and indemnified out of the
Reserve Account and/or the Income and Principal Accounts
of the Trust, and the payment of such amounts so paid by
the Trustee shall be secured by a lien on the Trust prior
to the interests of the Unit Holders;
The Depositor shall, upon request by the Trustee,
provide the Trustee with a current list of Securities
<PAGE>
designated to be sold for the purpose of payment of
expenses hereunder, provided that if the Depositor shall
for any reason fail to provide such a list, the Trustee,
in its sole discretion, may designate a current list of
Securities for such purposes. The net proceeds of any
such sales of Securities from such list representing
principal shall be credited to the Principal Account.
(j) the trustee except by reason of its own
negligence, bad faith or wilful misconduct shall not be
liable for any action taken, omitted or suffered to be
taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers
conferred upon it by this Indenture;
(k) so long as shall be required by
Section 26(a)(2)(C) of the Investment Company Act of 1940,
no payment to the Depositor or to any principal
underwriter (as defined in such Act) for the Trust or to
any affiliated person (as so defined) or agent of the
Depositor or such underwriter shall be allowed the Trustee
as an expense except for payment not in excess of such
reasonable amounts as compensation for performing
bookkeeping and other administrative services of a
character normally performed by the Trustee itself;
(l) the Trustee in its individual or any other
capacity may become an owner or pledgee of, or be an
underwriter or dealer in respect of, common stock and
other securities issued by the same issuer (or an
affiliate of such issuer) of any of the Securities at any
time held as part of the Trust and may deal with such
common stock or other securities in any manner with the
same rights and powers as if it were not the Trustee
hereunder; and
(m) the Trust may include a letter or letters of
credit for the purchase of Securities or Contract
Securities issued by the Trustee in its individual
capacity for the account of the Depositor and the Trustee
may otherwise deal with the Depositor and the Trust with
the same rights and powers as if it were not the Trustee
hereunder.
Section 6.02. Books, Records and Reports: The
Trustee shall keep proper books of record and account of all
the transactions under this Indenture and keep a register
described in Section 2.06 at its corporate trust office, and
such books,
<PAGE>
records and register shall be open to inspection by
any Unit Holder at all reasonable times during the usual
business hours.
The Trustee shall make such annual or other reports
as may from time to time be required under any applicable state
or federal statute or rule or regulation thereunder and the
Trustee shall, upon the request of a Unit Holder, provide such
Unit Holder and such Unit Holder's designated representative
with the cost basis of the Securities backing the Unit Holder's
Units and a calculation of the gain or loss on such Securities
in the case of Unit Holders of record on the Termination Date.
Section 6.03. Indenture and List of Securities on
File: The Trustee shall keep a certified copy or duplicate
original of this Indenture (including the Reference Trust
Agreement) on file at its corporate trust office available for
inspection at all reasonable times during the usual business
hours by any Unit Holder, together with a current list of the
Securities.
Section 6.04. Compensation of Trustee: For services
performed under this Indenture the Trustee shall be paid an
annual fee in an amount set forth in Part II of the Reference
Trust Agreement. Such compensation shall be payable quarterly
in an amount equal to one-fourth of the estimated annual
compensation of the Trustee and shall be computed on the basis
of the greatest amount of Units in the Trust at any time during
the period with respect to which such compensation is being
computed. The Trustee may from time to time adjust its
compensation as set forth above; provided, however, that total
adjustment upward does not, at the time of such adjustment,
exceed the percentage of the total increase, after the date
hereof, in consumer prices for services as measured by the
United States Department of Labor Consumer Price Index entitled
"All Services Less Rent" or, if such Index is no longer
published, in a similar index as determined by the Trustee and
Depositor. Further provided, however, that the right of the
Trustee to increase its fees shall not be cumulative and, if
not exercised by the Trustee for any calendar year, shall be
deemed waived for such calendar year. No exercise of its right
to such increase shall be effective unless made by the Trustee
by means of notification to the Depositor within 60 days
following the publication of the annual consumer price
information referred to above. The consent or concurrence of
any Unit Holder shall not be required for any such adjustment
or increase. Such compensation shall be deemed to provide only
for the usual normal and proper functions undertaken as Trustee
<PAGE>
pursuant to this Indenture and, in addition, the Trustee may
charge, to the extent then lawful, the Income and Principal
Accounts of the Trust for any and all expenses including legal,
auditing and printing expenses of maintaining registration or
qualification of the Units and/or the Trust under Federal or
state securities laws subsequent to initial registration so
long as the Depositor is maintaining a market for the Units and
including the fees of counsel which may be retained by the
Trustee in connection with its activities hereunder, and
disbursements incurred hereunder and additional compensation
for any extraordinary services performed by the Trustee
hereunder. In addition to the foregoing compensation, as part
of the Trustee's compensation for ordinary services performed
under this Indenture, the Trustee shall be entitled to the
benefits to the Trustee that may result from reasonable cash
balances in the Income Account and the Principal Account. The
Trustee shall be indemnified and held harmless against any loss
or liability accruing to it without negligence, bad faith or
wilful misconduct on its part, arising out of or in connection
with the acceptance or administration of this Trust, including
the costs and expenses (including counsel fees) of defending
itself against any claim of liability in the premises and
including any loss, liability or expense incurred in acting
pursuant to directions to the Trustee given by the Depositor
from time to time in accordance with the provisions of this
Indenture or in undertaking actions from time to time which the
Trustee deems necessary in its discretion to protect the Trust
and the rights and interests of Unit Holders pursuant to the
provisions of this Indenture. If the cash balances in the
Income and Principal Accounts shall be insufficient to provide
for amounts payable pursuant to this Section 6.04 the Trustee
shall have the power to sell (i) Securities from the current
list of Securities designated to be sold pursuant to
Section 5.02 hereof, or (ii) if no such Securities have been so
designated, such Securities as the Trustee may see fit to sell
in its own discretion, and to apply the proceeds of any such
sale in payment of the amounts payable pursuant to this
Section 6.04. The Trustee shall promptly notify the Depositor
of such action in writing and shall set forth therein the
Securities sold and the proceeds received therefrom. The
Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any sale of
Securities made pursuant to this Section 6.04. Any monies
payable to the Trustee pursuant to this Section shall be
secured by lien on the Trust prior to the interests of the Unit
Holders.
<PAGE>
Section 6.05. Removal and Resignation of Trustee;
Successor: The following provisions shall provide for the
removal and resignation of the Trustee and the appointment of
any successor trustee:
(a) the Trustee or any trustee or trustees hereafter
appointed may resign and be discharged of the trusts
created by this Indenture, by executing an instrument in
writing resigning as Trustee of the Trust and filing the
same with the Depositor and mailing a copy of a notice of
resignation to all Unit Holders then of record, not less
than sixty days before the date specified in such
instrument when, subject to Section 6.05(e), such
resignation is to take effect. Upon receiving such notice
of resignation, the Depositor shall promptly appoint a
successor trustee as hereinafter provided, by written
instrument, in duplicate, one copy of which shall be
delivered to the resigning Trustee and one copy to the
successor trustee. If at any time the Trustee shall
become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its
property or affairs for the purposes of rehabilitation,
conservation or liquidation, or, if the Depositor shall
determine in good faith that there has occurred either (1)
a material deterioration in the creditworthiness of the
Trustee or (2) one or more negligent acts on the part of
the Trustee having a materially adverse effect, either
singly or in the aggregate, on the Trust or on one or more
Trusts, such that the replacement of the Trustee is in the
best interests of the Units Holders, then in any such case
the Depositor may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, one
copy of which shall be delivered to the Trustee so removed
and one copy to the successor trustee; provided that a
notice of such removal and appointment of a successor
trustee shall be mailed by the Depositor to each unit
Holder then of record;
(b) any successor trustee appointed hereunder shall
execute, acknowledge and deliver to the Depositor and to
the retiring Trustee an instrument accepting such
appointment hereunder, and such successor trustee without
any further act, deed or conveyance shall become vested
with further act, deed or conveyance shall become vested
with all the rights, powers, duties and obligations of its
predecessor hereunder with the like effect as if
<PAGE>
originally named Trustee herein and shall be bound by
all the terms and conditions of this Indenture. Upon the
request of such successor trustee, the retiring Trustee
shall, upon payment of any amounts due the retiring
Trustee, or provision therefor to the satisfaction of such
retiring Trustee, execute and deliver an instrument
acknowledged by it transferring to such successor trustee
all the rights and powers of the retiring Trustee; and the
retiring Trustee shall transfer, deliver and pay over to
the successor trustee all Securities and monies at the
time held by it hereunder, together with all necessary
instruments of transfer and assignment or other documents
properly executed necessary to effect such transfer and
such of the records or copies thereof maintained by the
retiring Trustee in the administration hereof as may be
requested by the successor trustee, and shall thereupon be
discharged from all duties and responsibilities under this
Indenture. The retiring Trustee shall, nevertheless,
retain a lien upon all Securities and monies at the time
held by it hereunder to secure any amounts then due the
retiring Trustee;
(c) in case at any time the Trustee shall resign and
no successor trustee shall have been appointed or, if
appointed, shall not have accepted appointment within
thirty days after notice of resignation has been received
by the Depositor, the retiring Trustee may forthwith apply
to a court of competent jurisdiction for the appointment
of a successor trustee. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee;
(d) any corporation into which any Trustee hereunder
may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to
which any Trustee hereunder shall be a party, or any
corporation succeeding to all or substantially all of the
business of the Trustee shall be the successor trustee
under this Indenture without the execution or filing of
any paper, instrument or further act to be done on the
part of the parties hereto; anything herein or in any
agreement relating to such merger or consolidation, by
which any such trustee may seek to retain certain powers,
rights and privileges theretofore obtaining for any period
of time following such merger or consolidation, to the
contrary notwithstanding; and
<PAGE>
(e) any resignation or removal of the Trustee and
appointment of a successor trustee pursuant to this
Section shall become effective only upon acceptance of
appointment by the successor trustee as provided in
subsection (b) hereof.
Section 6.06. Qualification of Trustee: The Trustee
shall be a corporation organized and doing business under the
laws of the United States or any state thereof which is
authorized under such laws to exercise corporate trust powers
and having at all times an aggregate capital, surplus, and
undivided profits of not less than $5,000,000.
Section 6.07. Trustee's Response to Inquiries: The
Trustee shall deliver to the Depositor a copy of any written
response to any non-routine question or request at least one
day before sending the response.
Section 6.08. Waiver of Liens: No lien, encumbrance
or priority in favor of the Trustee against the assets of the
Trust will affect such assets or their proceeds after such
assets or proceeds have been distributed or paid to Unit
Holders or to the Distribution Agent on their behalf pursuant
to the terms of the Indenture and upon any such distribution
any lien, encumbrance or priority previously attaching to such
assets or their proceeds shall without any further action on
the part of the Trustee be automatically thereupon released and
relinquished by the Trustee.
ARTICLE VII
RIGHTS OF UNIT HOLDERS
Section 7.01. Beneficiaries of Trust: By the
purchase and acceptance or other lawful delivery and acceptance
of a Unit of the Trust the Unit Holder shall be deemed to be a
beneficiary of such Trust and vested with all rights, title and
interest in the Trust to the extent of the Unit or Units owned,
subject to the terms and conditions of this Indenture.
Section 7.02. Rights, Terms and Conditions: In
addition to the other rights and powers set forth in the other
provisions and conditions of this Indenture the Unit Holders
shall have the following rights and powers and shall be subject
to the following terms and conditions:
<PAGE>
(a) a Unit Holder may at any time on any Business
Day redeem his Units in accordance with Section 5.02;
(b) the death or incapacity of any Unit Holder shall
not operate to terminate this Indenture or the Trust, nor
entitle his legal representatives or heirs to claim an
accounting or to take any action or proceeding in any
court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them. Each Unit Holder
expressly waives any right he may have under any rule of
law, or the provisions of any statute, or otherwise, to
require the Trustee at any time to account, in any manner
other than as expressly provided in this Indenture, in
respect of the Securities or monies from time to time
received, held and applied by the Trustee hereunder; and
(c) no Unit Holder shall have any right to vote or
in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties
hereto, nor shall anything herein set forth be construed
so as to constitute the Unit Holders from time to time as
partners or members of any association; nor shall any Unit
Holder ever be under any liability to any third persons by
reason of any action taken by the parties to this
Indenture, or any other cause whatsoever.
ARTICLE VIII
DEPOSITOR
Section 8.01. Liabilities; Power of Attorney: The
Depositor, or the Depositors if there be more than one, shall
be severally liable in accordance herewith for the obligations
imposed upon and undertaken by the Depositor hereunder,
provided, however, that, without in any way affecting or
diminishing such several liability, each Depositor of the Trust
shall indemnify the other Depositors thereof and hold such
other Depositors harmless from and against any and all costs,
expenses and liabilities (including attorneys' fees) which such
other Depositors may suffer or incur as a result of or by
reason of any act or failure to act hereunder on the part of
the indemnifying Depositor. At all times prior to the
termination of the Trust and while the Depositors thereof shall
continue to act jointly hereunder, there shall be maintained on
file with
<PAGE>
the Trustee a power of attorney executed in favor of
one Depositor by the other Depositors constituting and
appointing the non-executing Depositor the true and lawful
agent and attorney-in-fact of the executing Depositors to
execute and deliver for and on behalf of the executing
Depositors any and all notices, opinions, certificates, lists,
demands, directions, instruments, or other documents provided
or permitted to be executed or delivered by the Depositors
hereunder in connection with the Trust or to take any other
action in respect hereof. Such power of attorney shall
continue in effect as to the executing Depositors until written
notice of revocation thereof has been given by such executing
Depositors to the Trustee. Prior to receipt of such notice of
revocation the Trustee shall be entitled to rely conclusively
upon such power of attorney as authorizing the non-executing
Depositor to give nay notice, opinion, certificate, list,
demand, direction, instrument or other document provided for or
permitted hereunder or to take any other action in respect
hereof on behalf of the executing Depositors as to which such
power of attorney is in effect.
Section 8.02. Discharge: If there be more than one
Depositor, the following provisions shall provide for the
discharge of a Depositor and the liability of the Depositors in
the event of the discharge of a Depositor:
(a) in the event that any Depositor shall fail to
undertake or perform any of the duties which be the terms
of this Agreement are required by it to be undertaken or
performed and such failure shall continue for 30 days
after notice to the Depositors from the Trustee or if any
Depositor shall become incapable of acting or shall have
an order of relief entered with respect to it, or a
receiver of the property of any Depositor shall be
appointed or any public officer shall take charge or
control of any Depositor or its property or affairs for
the purpose of rehabilitation, conservation or
liquidation, then such Depositor shall forthwith be and
shall be deemed to be discharged forever as a Depositor
hereunder and thereupon the remaining Depositors shall act
hereunder without the necessity of any other or further
action on its part or on the part of the Trustee;
(b) in the event that the power of attorney referred
to in Section 8.01 shall be revoked by written notice
given by an executing Depositor and it shall not be
replaced within one business day by another power of
<PAGE>
attorney conforming with the requirements of said Section
8.01, the Depositors of the Trust shall be deemed to have
been unable to reach agreement with respect to action to
be taken jointly by them hereunder in connection with the
Trust and thereupon the Depositor which has revoked the
power of attorney executed by it shall be discharged
hereunder upon the expiration of such one-day period and
thereupon the other Depositors shall act thereunder
without the necessity of any other or further action on
their part or on the part of the Trustee; and
(c) notwithstanding the discharge of a Depositor of
the Trust in accordance with this Section 8.02, such
Depositor shall continue to be fully liable in accordance
with the provisions hereof in respect of action taken or
refrained from under this Agreement by the Depositors
before the date of such discharge or by the undischarged
Depositors before or after the date of such discharge, as
fully and to the same extent as if no discharge has
occurred.
Section 8.03. Successors: The covenants, provisions
and agreements herein contained shall in every case be binding
upon any successor or successors to any Depositor and shall be
binding upon the General Partners of any Depositor which may be
a partnership and upon the capital interest of the limited
partners of any Depositor which may be a partnership. In the
event of the death, resignation or withdrawal of any partner of
any Depositor which may be a partnership, the partner so dying,
resigning or withdrawing shall be relieved of all further
liability hereunder if at the time of such death, resignation
or withdrawal such Depositor maintains a net worth (determined
in accordance with generally accepted accounting principles) of
at least $1,000,000. In the event of an assignment by any
Depositor to a successor corporation or partnership as
permitted by the next following sentence, such Depositor and,
if such Depositor is a partnership, its partners shall be
relieved of all further liability under this Indenture. Any
Depositor may transfer all or substantially all of its assets
to a corporation or partnership which carries on the business
of such Depositor, if at the time of such transfer such
successor duly assumes all the obligations of such Depositor
under this Indenture.
<PAGE>
Section 8.04. Resignation: If at any time any
Depositor of the Trust shall desire to resign its position as
such a Depositor hereunder and if at such time the other
Depositors of the Trust each maintains a net worth (determined
in accordance with generally accepted accounting principles) of
at least $1,000,000 and is agreeable to such resignation, the
Depositor desiring to resign may resign by delivering to the
Trustee an instrument executed by such resigning Depositor and
consented to by the remaining Depositors and upon such
delivery, the resigning Depositor shall be discharged and shall
no longer be liable in any manner hereunder except as to acts
or omissions occurring prior to such delivery and the remaining
Depositors shall thereupon perform all duties and be entitled
to all rights under the Agreement; provided, however, that
concurrently with or subsequent to such resignation the
remaining Depositors and the Trustee may appoint a new
Depositor to act with the remaining Depositors and to assume
the duties of the resigning Depositor by an instrument executed
by the remaining Depositors, the Trustee and the new Depositor
or proceed as provided in Section 6.01(f). Such new Depositor
shall not be under any liability hereunder for occurrences or
omissions prior to the effective time of execution of such
instrument.
Section 8.05. Additional Depositors: The Depositor
may at any time appoint one or more corporations or
partnerships to act as new Depositor, in addition to those
currently serving, by an instrument executed by such Depositor,
the Trustee, and such corporations or partnerships; provided,
however, that at the time of such execution each new Depositor
maintains a net worth (determined in accordance with generally
accepted accounting principles) of at least $1,000,000. Upon
such execution, a new Depositor shall be deemed to be a
depositor for all purposes under this Indenture, and the
covenants, provisions and agreements herein contained shall in
every case be binding upon such new Depositor and shall be
binding upon the General Partner of any such new Depositor
which may be a partnership and upon the capital interest of the
limited partners of any such new Depositor which may be a
partnership, but such new Depositor shall not be liable
hereunder for occurrences or omissions prior to the effective
time of execution of such instrument.
<PAGE>
Section 8.06. Exclusions from Liability: The
following provisions provide for certain exclusions from the
liability of the Depositor:
(a) no Depositor shall be under any liability to any
other Depositor, the Trust or the Unit Holders thereof,
for any action taken or for refraining from the taking of
any action in good faith pursuant to this Agreement, or
for errors in judgment or liable or responsible in any way
for depreciation or loss incurred by reason of the
acquisition or sale of any Securities; provided, however,
that this provision shall not protect the Depositor
against any liability to which it would otherwise be
subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and
duties hereunder. The Depositor may rely in good faith on
any paper, order, notice, list, affidavit, receipt,
evaluation, opinion, endorsement, assignment, draft or any
other document of any kind prima facie properly executed
and submitted to them, or any of them, by any other
Depositor, the Trustee, counsel to an issuer of a
Security, or any other person. The Depositor shall in no
event be deemed to have assumed or incurred any liability,
duty, or obligation to any Unit Holder or the Trustee
other than as expressly provided for herein;
(b) the Depositor shall not be under any obligation
to appear in, prosecute or defend any legal action which
in its opinion may involve it in any expense or liability;
provided, however, that the Depositor may in its
discretion undertake any such action which it may deem
necessary or desirable in respect of this Indenture and
the rights and duties of the parties hereto and the
interests of the Unit Holders hereunder; and
(c) none of the provisions of this Indenture shall
be deemed to protect or purport to protect the Depositor
against any liability to the Trust or to the Unit Holders
thereof or to each other (if there is more than one
Depositor) to which the Depositor would otherwise be
subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of the duties of the
Depositor, or by reason of the Depositor's reckless
disregard of the obligations and duties of the Depositor
under this Indenture.
<PAGE>
Section 8.07. Compensation: The Depositor shall
receive at the times set forth in Section 3.05 as compensation
for performing portfolio supervisory services, such amounts,
and for such periods, as are specified in the Reference Trust
Agreement. The computation of such compensation shall be made
on the basis of the greatest number of Units in the Trust at
any time during which such compensation is being computed. At
no time, however, will the total amount received by the
Depositor for services rendered to all series of the National
Equity Trust in any calendar year exceed the aggregate cost to
it of supplying such services in such year except to the extent
permitted by law. Such rate may be increased from time to
time, without the consent or approval of any Unit Holder or the
Trustee, by amounts not exceeding the proportionate increase
during the period from the date of such Reference Trust
Agreement to the date of any such increase, in consumer prices
as published either under the classification "All Services Less
Rent" in the Consumer Price Index published by the United
States Department of Labor or, if such Index is no longer
published, a similar index.
ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.01. Amendments without the Consent of Unit
Holders: This Indenture may be amended from time to time by
the parties hereto or their respective successors, without the
consent of any of the Unit Holders (a) to cure any ambiguity or
to correct or supplement any provisions contained herein which
may be defective or inconsistent with any other provisions
contained herein; (b) to change any provision hereof as may be
required by the Securities and Exchange Commission or any
successor governmental agency exercising similar authority; or
(c) to make such other provision in regard to matters or
questions arising hereunder as shall not adversely affect the
interest of the Unit Holders; provided, that the Indenture may
also be amended from time to time by the parties hereto (or the
performance of any of the provisions of this Indenture may be
waived) with the consent of Unit Holders evidencing 51% of the
Units at the time outstanding under the Indenture for the
purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Unit Holders;
provided further, however, that this Indenture (including any
Reference Trust Agreement) may not be amended (nor may any
provision thereof be
<PAGE>
waived) so as to (1) increase the number of Units issuable in
respect of the Trust above the aggregate number specified in
Part II of the Reference Trust Agreement or such lesser amount
as may be outstanding at any time during the term of this
Indenture, except as the result of the deposit of Additional
Securities, as herein provided, or as otherwise provided herein,
or reduce the relative interest in the Trust of any Unit Holder
without his consent, (2) permit the deposit or acquisition
hereunder of securities or other property either in addition to
or in substitution for any of the Securities except in the
manner permitted by the Trust Indenture as in effect on the date
of the first deposit of Securities under a particular Indenture
or permit the Trustee to engage in business or investment
activities not specifically authorized in this Indenture as
originally executed or (3) adversely affect the characterization
of the Trust as a grantor trust for federal income tax purposes.
Section 9.02. Notice of Amendment: Promptly after
the execution of any amendment the Trustee shall furnish
written notification of the substance of such amendment to all
Unit Holders then of record at their addresses appearing on the
registration books of the Trustee.
Section 9.03. Termination: This Indenture and the
Trust created hereby shall terminate upon the redemption, sale
or other disposition as the case may be of the last Security
held in the Trust hereunder unless sooner terminated as
hereinbefore specified and may be terminated at any time by the
written consent of the Holders of Fifty One per cent of the
Units of the Trust then outstanding; provided, that in no event
shall this Trust continue beyond the Termination Date as set
forth in Part II of the Reference Trust Agreement. Written
notice of any termination, shall be given by the Trustee to
each Unit Holder of record at his address appearing on the
registration books of the Trustee.
(a) Within a reasonable period of time after
termination of the Trust the Trustee shall liquidate such
Securities as it shall deem necessary for payment of Trust
expenses and shall:
(i) deduct from the Income Account of the
Trust or, to the extent that funds are not
available in such account, from the Principal
Account of the Trust and pay to itself
individually an amount equal to the sum of (1) its
accrued
<PAGE>
compensation for its ordinary recurring
services in connection with the Trust, (2) any
compensation due it for its extraordinary services
and (3) any costs, expenses or indemnities in
connection with the Trust as provided herein;
(ii) deduct from the Income Account or, to
the extent that funds are not available in such
Account, from the Principal Account and pay
accrued and unpaid fees to the Depositor pursuant
to Section 3.05;
(iii) deduct from the Income Account of
the Trust or, to the extent that funds are not
available in such Account, from the Principal
Account of the Trust, any amounts which may be
required to be deposited in the Reserve Account of
the Trust to provide for payment of any applicable
taxes or other governmental charges and any other
amounts which may be required to meet expenses
incurred under this Indenture in connection with
the Trust;
(b) (i) If the Trust shall terminate on the
Termination Date provided in the Reference Trust
Agreement, the Trustee shall distribute the
remaining Securities in the Principal Account plus
the cash balances in the Principal and Income
Accounts to the Distribution Agent for
distribution in accordance with the Distribution
Agency Agreement.
(ii) If the Trust shall terminate on a date
other than the Termination Date, the Trustee shall
fully liquidate the remaining Securities in the
Principal Account and shall distribute to each
Unit Holder such Unit Holder's pro rata interest
in the balance of the Income Account and Principal
Account of the Trust.
The amounts to be so distributed to each Unit Holder
shall be that pro rata share of the balance of the total Income
and Principal Accounts of the Trust as shall be represented by
the Units therein held by such Unit Holder.
(c) Together with such distribution to each Unit
Holder as provided for in (b) of this Section, the Trustee
<PAGE>
shall furnish to each such Unit Holder a final distribution
statement as of the date of computation of the amount
distributable to Unit Holders, setting forth the information in
substantially the form and manner provided for in Section 3.06
hereof, except that, with respect to distribution made pursuant
to such Paragraph b(i) of this Section, such statement shall
show the Securities delivered to the Distribution Agent.
(d) The Trustee shall distribute to each Unit Holder
any dividends, which on the Termination Date were declared, but
not received, net of any and all expenses not previously
deducted, within a reasonable time of their receipt.
The Trustee shall be under no liability with respect
to monies held by it in the Income, Reserve and Principal
Accounts upon termination except to hold the same in trust
without interest until disposed of in accordance with the terms
of this Indenture.
Section 9.04. Construction: This Indenture is
executed and delivered in the State of New York and all laws or
rules of construction of such State shall govern the rights of
the parties hereto and the Unit Holders and the interpretation
of the provisions hereof. Headings and titles herein are for
convenience only and should not influence such interpretation.
Section 9.05. Written Notice: Any notice, demand,
direction or instruction to be given to the Depositor hereunder
shall be in writing and shall be duly given if mailed or
delivered to the Depositor c/o Prudential Securities
Incorporated at One Seaport Plaza, New York, New York 10292 or
at such other address as shall be specified by the Depositor to
the other parties hereto in writing. Any notice to be given to
the Unit Holders shall be duly given if mailed or delivered to
each Unit Holder at the address of such holder appearing on the
registration books of the Trustee. Any notice, demand,
direction or instruction to be given to the Trustee hereunder
shall be in writing and shall be given if mailed or delivered
to the Trustee at its office at 770 Broadway, New York, New
York 10003-9598, or such other address as shall reasonably be
specified by the Trustee in writing to the other parties
hereto.
Section 9.06. Severability: If any one or more of
the covenants, agreements, provisions or terms of this
Indenture shall be held contrary to any express provision of
law or contrary to policy of express law, though not expressly
prohibited, or against public policy, or shall for any reason
<PAGE>
whatsoever be held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this
Indenture and shall in no way affect the validity or
enforceability of the other provisions of this Indenture or the
rights of the holders thereof.
Section 9.07. Dissolution of Depositor Not to
Terminate: The dissolution of one or all of the Depositors (if
more than one) from or for any cause whatsoever shall not
operate to terminate this Indenture insofar as the duties and
obligations of the Trustee are concerned.
Section 9.08. Name: Depositor reserves the right to
use the name "National Equity Trust," with a distinguishing
series number or name, without the consent of the Trustee.
IN WITNESS WHEREOF, Prudential Securities
Incorporated has caused this Trust Indenture and Agreement to
be executed by one of its authorized officers and its corporate
seal to be hereto affixed and attested by its Secretary or
Assistant Secretary and United States Trust Company of New York
has caused this Trust Indenture and Agreement to be executed by
one of its Vice Presidents or Assistant Vice Presidents and its
corporate seal to be hereto affixed and attested by one of its
Assistant Secretaries all as of the day, month and year first
above written.
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED,
Depositor
By /s/ Kenneth Swankie
Senior Vice President
Manager- Unit Investment Trust
Department
(SEAL)
ATTEST:
By /s/ Kathleen B. Maguire
Assistant Secretary
<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
By /s/ Mary Patterson
Assistant Vice President
(SEAL)
ATTEST:
By /s/ Linda Hayes
Assistant Secretary
STATE OF NEW YORK)
: ss.:
COUNTY OF NEW YORK)
I, Ada Iris Vega, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that Mary Patterson and Linda Hayes person-
ally known to me to be the same persons whose names are subscribed to the
foregoing instrument and personally known to me to be an Assistant Vice
President and Assistant Secretary, respectively, of United States Trust Company
of New York, a corporation, appeared before me this day in person, and acknowl-
edged that they signed, sealed with the corporate seal of United States Trust
Company of New York, and delivered the said instrument as their free and
voluntary act as such Assistant Vice President and Assistant Secretary, respec-
tively, and as the free and voluntary act of said United States Trust Company
of New York for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 21st day of April, 1995.
/s/ Ada Iris Vega
Notary Public
(SEAL)
Executed in Parts
Counterpart No. ( )
NATIONAL EQUITY TRUST
LOW FIVE PORTFOLIO SERIES 1
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated April 25, 1995
among Prudential Securities Incorporated, as Depositor, and
United States Trust Company of New York, as Trustee, sets forth
certain provisions in full and incorporates other provisions by
reference to the document entitled "National Equity Trust
Low Five Portfolio Series, Trust Indenture and Agreement" (the "Basic Agree-
ment") dated April 25, 1995. Such provisions as are set forth in full herein
and such provisions as are incorporated by reference constitute a single
instrument (the "Indenture").
WITNESSETH THAT :
In consideration of the premises and of the mutual
agreements herein contained, the Depositor and the Trustee
agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the
provisions contained in the Basic Agreement are herein
incorporated by reference in their entirety and shall be deemed
to be a part of this instrument as fully and to the same extent
as though said provisions had been set forth in full in this
instrument.
* * * * *
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are
hereby agreed to:
(a) The Trust is denominated National Equity
Trust Low Five Portfolio Series 1.
(b) The Units of the Trust shall be subject
<PAGE>
to a deferred sales charge.
(c) The contracts for the purchase of common
stock listed in Schedule A hereto are those which,
subject to the terms of this Indenture, have been or
are to be deposited in trust under this Indenture as
of the date hereof.
(d) The term "Depositor" shall mean Prudential
Securities Incorporated.
(e) The aggregate number of Units referred to
in Sections 2.03 and 9.01 of the Basic Agreement is
250,001 as of the date hereof.
(f) A Unit of the Trust is hereby declared
initially equal to 1/250,001th of the Trust.
(g) The term "First Settlement Date" shall mean
May 3, 1995.
(h) The terms "Computation Day" and
"Record Date" shall mean January 10, April 10, July 10
and October 10.
(i) The term "Distribution Date"
shall mean January 25, April 25, July 25 and
October 25.
(j) The term "Termination Date" shall mean
May 22, 1996.
(k) The Trustee's annual fee shall be: $0.74
(per 1,000 Units) for 100,000,000 and above units
outstanding; $0.80 (per 1,000 Units) for 50,000,000 -
99,999,999 units outstanding; $0.86 (per 1,000 Units)
for 49,999,999 and below units outstanding. In
calculating the Trustee's annual fee, the fee applicable
to the number of units outstanding shall apply to all
units outstanding.
(l) The Depositor's portfolio supervisory
service fee shall be $0.25 per 1,000 Units.
[Signatures and acknowledgments on separate pages]
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED,
Depositor
By /s/ Kenneth Swankie
Senior Vice President
Manager- Unit Investment Trust
Department
(SEAL)
ATTEST:
By Kathleen B. Maguire
Assistant Secretary
<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
By /s/ Mary Patterson
Assistant Vice President
(SEAL)
ATTEST:
By /s/ Linda Hayes
Assistant Secretary
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, Ada Iris Vega, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that Mary Patterson and Linda Hayes person-
ally known to me to be the same persons whose names are subscribed to the
foregoing instrument and personally known to me to be an Assistant Vice
President and Assistant Secretary, respectively, of United States Trust Company
of New York, a corporation, appeared before me this day in person, and acknowl-
edged that they signed, sealed with the corporate seal of United States Trust
Company of New York, and delivered the said instrument as their free and
voluntary act as such Assistant Vice President and Assistant Secretary, respec-
tively, and as the free and voluntary act of said United States Trust Company
of New York for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 21st day of April, 1995.
/s/ Ada Iris Vega
Notary Public
(SEAL)
Exhibit 5
[Letterhead of Cahill Gordon & Reindel]
April 25, 1995
Prudential Securities Incorporated
One New York Plaza
New York, New York 10292
Re: National Equity Trust
Low Five Portfolio Series 1
Gentlemen:
We have acted as special counsel for you as Depositor of
the National Equity Trust, Low Five Portfolio Series 1 (the
"Trust"), in connection with the issuance under the Trust
Indenture and Agreement, dated April 25, 1995, and related
Reference Trust Agreement, dated April 25, 1995 (such Trust
Indenture and Agreement and Reference Trust Agreement collectively
referred to as the "Indenture"), among you, as Depositor and
United States Trust Company of New York, as Trustee, of units of
fractional undivided interest in said Trust (the "Units")
comprising the Units of National Equity Trust, Low Five Portfolio
Series 1. In rendering our opinion expressed below, we have
relied in part upon the opinions and representations of your
officers and upon opinions of counsel to Prudential Securities
Incorporated.
Based upon the foregoing, we advise you that, in our
opinion, when the Indenture has been duly executed and delivered
on behalf of the Depositor and the Trustee and when the Receipt
for Units evidencing the Units has been duly executed and
delivered by the Trustee to the Depositor in accordance with the
Indenture, the Units will be legally issued, fully paid and
nonassessable by the Trust, and will constitute valid and binding
obligations of the Trust and the Depositor in accordance with
their terms, except that enforceability of certain provisions
thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors generally and by general equitable principles.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement (File No. 33-55475) relating
to the Units referred to above and to the use of our name and to
the reference to our firm in said Registration Statement and the
related Prospectus.
Very truly yours,
Cahill Gordon & Reindel
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS FOR NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES 1 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<SERIES>
<NAME> NATIONAL EQUITY TRUST LOW FIVE PORTFOLIO SERIES
<S> <C>
<NUMBER> 1
<MULTIPLIER> 1
<FISCAL-YEAR-END> APR-25-1995
<PERIOD-START> APR-25-1995
<PERIOD-END> APR-25-1995
<PERIOD-TYPE> OTHER
<INVESTMENTS-AT-COST> 247,502
<INVESTMENTS-AT-VALUE> 247,502
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 247,502
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4375
<TOTAL-LIABILITIES> 4375
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 247,502
<SHARES-COMMON-STOCK> 250,001
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 247,502
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 250,001
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
EXHIBIT A
DISTRIBUTION AGENCY AGREEMENT
This Distribution Agency Agreement ("Agreement")
dated as of April 25, 1995, among Prudential Securities
Incorporated, as the Depositor (the "Depositor"), United States
Trust Company of New York, as Trustee (the "Trustee") pursuant
to the Trust Indenture and Agreement and the Reference Trust
"Indenture"), relating to National Equity Trust Low Five
Portfolio Series 1 (the "Trust") and United States Trust
Company of New York, as Distribution Agent (the "Agent"), sets
forth procedures for the distribution of proceeds of
redemptions of Units from the Trust to the Unit Holders. All
capitalized terms used but not defined herein that are defined
in the Indenture are used herein as defined therein.
WITNESSETH THAT:
In consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee and the
Agent agree as follows:
ARTICLE I
Distributions Between Trustee and Agent
SECTION 1.01. Redemption of Units.
(a) In Kind Redemption: Units tendered as set forth
in Section 5.02 of the Indenture for redemption shall be
redeemed on the Tender Day. Subject to payment by a
tendering Unit Holder of any tax or other governmental
charges which may be imposed thereon, such redemption
shall be made by the distribution by the Trustee to the
Agent on the Tender Day of the Redemption Distribution
which shall then be distributed to the tendering Unit
Holder on the Redemption Date plus cash equal to the value
of fractional shares, in accordance with Section 5.02 of
the Indenture, provided, however, that the right of a Unit
Holder to receive a distribution in kind shall be
conditioned on such Unit Holder tendering Units with a
value of in excess of $250,000.
<PAGE>
(b) Cash Redemption of Units: Unit Holders may
redeem such Units and request payment of the Redemption
Distribution in cash. Such request shall be in writing
and submitted to the Trustee at the time the Units are
tendered for redemption. Failure to so request shall
result in distribution in cash as set forth in this
paragraph (b). Units tendered for redemption with such a
request for cash shall be tendered and redeemed in the
manner and at the times set forth in (a) above for in kind
redemptions, except that on the Tender Date related to
such tender by a Unit Holder or as soon thereafter as
possible, the Agent shall sell the Securities which
comprise the Redemption Distribution, using its best
reasonable efforts to secure the best price obtainable for
such Securities and shall distribute to the Unit Holder,
subject to payment by the Unit Holder of any tax or
governmental charges that may be imposed thereon or any
brokerage commission charged on the sale, for each Unit
tendered (i) an amount in cash equal to the proceeds from
the sale of the Securities which comprise the Redemption
Distribution; (ii) an amount in cash equal to the Unit
Cash value (determined as of the Evaluation Time on the
date of tender) and (iii) cash equal to the value of any
fractional shares included in the Unit Holder's pro rata
portion of the Securities as of the Tender Day distributed
to the Agent by the Trustee. Such cash distribution shall
be made within seven calendar days of the Tender Day.
Neither the Agent nor the Depositor shall be liable or
responsible in any way for depreciation or loss incurred
by reason of any sale or sales made in accordance with
this Section 1.01(b).
With respect to either (a) or (b) above, if the Unit Cash Value
is an amount less than zero, the Agent shall remit to the
Trustee (or the Trustee shall, in the case of (x) or (y) below,
withhold from distribution to the redeeming Unit Holder) for
each redeemed Unit the negative amount, obtained from the
following sources in the following order until such amount has
been remitted to the Trustee in full:
(x) amounts due the Unit Holder of such redeemed Units
from the sale of fractional shares of Securities
otherwise part of the Redemption Distribution;
(y) amounts otherwise due to the Unit Holder of such
redeemed Units in the form of an Income Distribution;
<PAGE>
(z) proceeds from the sale of other shares of Securities
otherwise part of the Redemption Distribution.
SECTION 1.02. Distribution of Securities,
Liquidation, and Investment in New Trust Upon Termination: (a)
Securities to be distributed in kind as set forth in
Section 5.03 of the Indenture shall be distributed on the first
Business Day following the Termination Date in accordance with
the provisions of such Section.
(b) Each Unit Holder who elects either to receive
cash or to invest in a subsequent trust shall have his
Termination Distribution held by the Agent on his behalf for
disposition in accordance with this Section 1.02(b).
On each Business Day during the 10 Business-Day
period following the Termination Date (the "Special
Distribution Period"), the Securities subject to disposition
under this Section 1.02(b) shall be sold by the Depositor as
sub-agent for the Agent, using its best reasonable efforts to
secure the best price obtainable for the Securities or by such
other sub-agent as shall be designated by the Depositor or
absent such designation such other sub-agent as the Agent shall
determine. The Depositor, as such sub-agent, will open a
customer account for the Agent and will sell, on each Business
Day, at least an amount of the then unsold Securities (based on
the number of shares of underlying Securities of each issuer)
multiplied by a fraction the numerator of which is one and the
denominator of which is the number of days remaining in the 10
day period. Neither the Agent nor the Depositor shall be
liable for or responsible in any way for depreciation or loss
incurred by reason of any sale or sales made in accordance with
this Section 1.02(b). Upon the Sale of the last security the
Depositor as such sub-agent for the Agent shall deduct from the
proceeds of these sales (the "Sales Proceeds") and pay any tax
or governmental charges and commissions in connection with the
sale. The Agent shall hold each day's proceeds in an account
which is non-interest bearing to Unit Holders and is available
for use by the Agent pursuant to normal banking procedures.
Upon the settlement of the last sale of securities,
the Distribution Agent shall distribute to Unit Holders
electing distribution in cash the Sales Proceeds plus their pro
rata share of the cash balances in the Principal and Income
Accounts or on behalf of Unit Holders electing reinvestment,
shall apply the Sales Proceeds plus their pro rata share of the
cash balances in the Principal and Income Accounts towards the
purchase
<PAGE>
of Units of the next National Equity Trust, Low Five
Portfolio Series to be offered (the "New Series"), if any.
The Agent shall, as soon as reasonably possible after
the Sales Proceeds are so applied to the purchase of New Series
units, distribute to each Unit Holder all Units so purchased
and held on his behalf and provide a report to each Unit Holder
showing the total number of New Series units credited to him
and the sales charge included in the price for New Series
units.
ARTICLE II
Distribution between Agent and Unit Holders
SECTION 2.01. Cash Distributions: (a) Upon receipt
of any cash distributed from the Principal and Income Accounts
or as a result of the sale of Securities as provided in
Section 1.01 and 1.02 hereof, the Agent shall deposit such cash
in an account entitled United States Trust Company of New York,
as Agent pursuant to the Distribution Agency Agreement dated
April 25, 1995 or other similar title (the "Agency Account").
All distributions to be made pursuant to this Agreement shall
be made from such account.
(b) Cash to be distributed to the Trustee for its
own account as provided in Section 1.01 hereof shall be
distributed by means of interaccount transfer or by such other
method as the Trustee and Agent may approve.
(c) Cash to be distributed to Unit Holders shall be
distributed by the Agent to such Holders in the manner
generally used by the Trustee for cash Income Distributions
made to Unit Holders.
SECTION 2.02. Extraordinary Distributions: If the
Trustee should at any time receive Securities or other property
that it is required to dispose of pursuant to the Indenture,
such disposition shall be made in the same manner as provided
in Section 1.01(b) hereof for the conversion of Securities to
cash; provided, however, that if such other property received
is not readily marketable, the Agent shall consult with the
Depositor concerning the method of disposition of such other
property most likely to maximize cash yield and efficiency of
time and convenience. The Depositor's determination of such
method of disposition shall be final and binding and the Agent
shall be entitled to rely in good faith upon such
<PAGE>
determination. Cash received upon such a disposition shall be
distributed by the Agent to the Unit Holders in the pro-rata
portions and the addresses provided by the Trustee.
SECTION 2.03. Statements and Reports: Any statement
or report required by Section 3.06 of the Indenture to be
distributed to Unit Holders may be distributed by the Agent as
provided in said Section 3.06. After the sale of the last
Security as set forth in Section 1.02(b) herein the Agent shall
distribute to a Unit Holder upon the request of such Unit
Holder or upon the request of the Depositor a statement which
shall set forth the Securities received by the Distribution
Agent from the Trustee and the proceeds of the sale of such
Securities.
ARTICLE III
Miscellaneous
SECTION 3.01. Fees and Expenses: The Agent shall
receive no fee for its services hereunder; provided, however,
that the Trustee may pay the Agent a fee equal to the costs of
the Agent's services hereunder, which costs shall be allowed
the Trustee as a cost of its services as Trustee, but the
Trustee shall not be entitled to be reimbursed by the Trust for
any such fee paid to the Agent to the extent the Trustee would
thereby receive a fee greater than the Trustee's fee set forth
in the Indenture. Out-of-pocket expenses incurred by the Agent
(e.g., mailing costs) shall be reimbursed by the Trustee and
shall be treated as expenses of the Trust under the Indenture.
The Agent shall be indemnified and held harmless against any
loss or liability accruing to it without negligence, bad faith
or wilful misconduct on its part, arising out of or in
connection with the acceptance or administration of this
Agreement, including the costs and expenses (including counsel
fees) of defending itself against any claim of liability in the
premises.
SECTION 3.02. General Matters Relating to Agent:
(a) All moneys deposited with or received by the Agent
hereunder shall be held by it without interest until required
to be disbursed in accordance with the provisions of this
Agreement.
(b) The Agent shall be under no liability for any
action taken in good faith in reliance on any appraisal, paper,
order, list, demand, request, consent, affidavit, notice,
opinion, direction, evaluation, endorsement, assignment,
<PAGE>
resolution, draft or other document provided by the Trustee or
the Depositor, whether or not of the same kind, prima facie
properly executed, or for the disposition of moneys or
Securities pursuant to this Agreement; or in respect of any
evaluation which it is required to make or is required or
permitted to have made by others under this Agreement or
otherwise, except by reason of its own wilful misfeasance, bad
faith or negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties
hereunder. The Agent may construe any of the provisions of
this Agreement, insofar as the same may appear to be ambiguous
or inconsistent with any other provisions hereof which
construction shall be binding upon the Unit Holders and the
parties hereto. The Agent shall be under no liability for any
construction of any such provisions hereof.
SECTION 3.03. Resignation, Discharge or Removal of
Agent; Successors: (a) The Agent may resign and be discharged
from the duties created by this Agreement by executing a
written resignation as such Agent, and filing the same with the
Trustee and the Depositor. Upon receiving such notice of
resignation, the Depositor shall use its best efforts promptly
to appoint a successor Agent in the manner and meeting the
qualifications hereinafter provided. In case at any time the
Agent shall not meet the requirements set forth in Section 3.04
hereof, or shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of such Agent
or of its property shall be appointed, or any public officer
shall take charge or control of such Agent or of any of its
property or affairs for the purposes of rehabilitation,
conservation or liquidation or if the Depositor shall determine
in good faith that there has occurred either (1) a material
deterioration in the creditworthiness of the Agent or (2) one
or more negligent acts on the part of the Agent having a
materially adverse effect, either singly or in the aggregate,
on the Securities and proceeds thereof and interests of the
Unit Holders, such that the replacement of the Agent is in the
best interests of the Units Holders, the Depositor may remove
such Agent and appoint a successor Agent by written instrument
or instruments delivered to the Trustee, the Agent so removed
and the successor.
(b) In case at any time the Agent shall resign and
no successor Agent shall have been appointed within thirty days
after notice of resignation has been received by the Depositor,
the Depositor shall serve as Agent until a qualified successor
Agent is appointed.
<PAGE>
SECTION 3.04. Qualification of Agent: The Agent and
any successor Agent shall be a banking or trust corporation
meeting the requirements of the Investment Company Act of 1940
for trustees, organized and doing business under the laws of
the United States or any state thereof, having at all times an
aggregate capital, surplus, and undivided profits of not less
than $5,000,000.
SECTION 3.05. Procedure Upon Termination: This
Agreement and the duties created hereby shall terminate upon
the disposition of the last Security and the proceeds of such
Security held under the Indenture and this Distribution Agency
Agreement.
SECTION 3.06. Amendment and Waiver: This Agreement
may be amended from time to time by the Depositor, the Trustee
and the Agent (a) to cure any ambiguity or to correct or
supplement any provision contained herein which may be
defective or inconsistent with any other provision contained
herein; or (b) to make such other provisions in regard to
matters or questions arising hereunder as shall not materially
adversely affect the interests of the Unit Holders.
SECTION 3.07. New York Law to Govern: The internal
laws of the State of New York shall govern the rights of the
parties hereto and the interpretation of the provisions hereof.
SECTION 3.08. Notices: Any notice, demand,
direction or instruction to be given to the Depositor hereunder
shall be in writing and shall be duly given if mailed or
delivered to Prudential Securities Incorporated, One Seaport
Plaza, New York, New York 10292, or at such other address as
shall be specified by the Depositor to the other parties hereto
in writing. Any notice, demand, direction, or instruction to
be given to the Trustee or Agent shall be in writing and shall
be duly given if mailed or delivered to its office at 770
Broadway, New York, New York 10003, or such other address as
shall be specified to the other parties hereto by the Trustee
or Agent, as the case may be, in writing.
SECTION 3.09. Severability: If any one or more of
the covenants, agreements, provisions or terms of this
Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed
severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the
<PAGE>
validity or enforceability of the other provisions of this
Agreement.
SECTION 3.10. Separate and Distinct Series: Each
Trust established as a Series of the National Equity Trust
shall, for all financial and administrative purposes, be
considered separate and distinct from every other Trust, and
the assets of one Trust shall not be commingled with the assets
of another Trust nor shall the expenses of any one Trust be
charged against any other Trust.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the date first written
above.
<PAGE>
PRUDENTIAL SECURITIES INCORPORATED,
Depositor
By /s/ Kenneth Swankie
Senior Vice President
Manager- Unit Investment Trust
Department
(SEAL)
ATTEST:
By Kathleen B. Maguire
Assistant Secretary
<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
By /s/ Mary Patterson
Assistant Vice President
(SEAL)
ATTEST:
By /s/ Linda Hayes
Assistant Secretary
STATE OF NEW YORK)
: ss.:
COUNTY OF NEW YORK)
I, Ada Iris Vega, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that Mary Patterson and Linda Hayes person-
ally known to me to be the same persons whose names are subscribed to the
foregoing instrument and personally known to me to be an Assistant Vice
President and Assistant Secretary, respectively, of United States Trust Company
of New York, a corporation, appeared before me this day in person, and acknowl-
edged that they signed, sealed with the corporate seal of United States Trust
Company of New York, and delivered the said instrument as their free and
voluntary act as such Assistant Vice President and Assistant Secretary, respec-
tively, and as the free and voluntary act of said United States Trust Company
of New York for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 21st day of April, 1995.
/s/ Ada Iris Vega
Notary Public
(SEAL)
<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK,
Distribution Agent
By /s/ Mary Patterson
Assistant Vice President
(SEAL)
ATTEST:
By /s/ Linda Hayes
Assistant Secretary
STATE OF NEW YORK)
: ss.:
COUNTY OF NEW YORK)
I, Ada Iris Vega, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that Mary Patterson and Linda Hayes person-
ally known to me to be the same persons whose names are subscribed to the
foregoing instrument and personally known to me to be an Assistant Vice
President and Assistant Secretary, respectively, of United States Trust Company
of New York, a corporation, appeared before me this day in person, and acknowl-
edged that they signed, sealed with the corporate seal of United States Trust
Company of New York, and delivered the said instrument as their free and
voluntary act as such Assistant Vice President and Assistant Secretary, respec-
tively, and as the free and voluntary act of said United States Trust Company
of New York for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 25th day of April, 1995.
/s/ Ada Iris Vega
Notary Public
(SEAL)
